Cost basis for inherited property

My mother purchased her home in 2004 for $235,000.

Death of mother in July 2014, house appraised at $170,000.

I inherited the home and let my aunt live there until her death in April 2021. I did not live there at any time.

I sold the house within 6 months for $250,000.

Can I use the original purchase price as the cost basis, capital gain = $250,000 - $235,000 = $15,000 or do I have to step up the basis to the $170,000 for a capital gain of $250,000 - $170,000 = $80,000?

Thank you.

315

Expert Alumni

Mar 1, 2022 3:58:30 PM

No, you cannot use your mother's cost basis. Inherited assets are subject to either a step-up in basis or a step down in basis. A “step-down,” instead of a “step-up,” occurs if a decedent dies owning property that has declined in value. In that case the basis is lowered to the date-of-death value.

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Cost basis for inherited property