# How Tax Basis Works on Property You Inherit
When you inherit property, the IRS grants you a significant tax advantage called a "stepped-up basis." Here's what that means and why it matters for your wallet.
The stepped-up basis rule lets you inherit stocks, real estate, gold, or other assets at their market value on the date of the owner's death, not what the original owner paid. This eliminates capital gains taxes on appreciation that happened during the deceased's lifetime.
Example: Your parent bought a house for $150,000 in 1985. When they pass away in 2024, the house is worth $450,000. You inherit it with a stepped-up basis of $450,000. If you sell immediately for $450,000, you owe zero capital gains tax. The $300,000 gain disappears entirely.
The same rule applies to stocks and bonds. If your relative owned 100 shares of a stock they bought at $10 per share, but the stock trades at $80 when they die, your basis resets to $80 per share. You inherit with no tax bill for those gains.
This stepped-up basis applies to your entire inherited portfolio. Gold coins, jewelry, mutual funds, and real estate all get this treatment. The only gains taxed later are those that happen after you inherit.
There are limits. Federal estate taxes still apply to estates exceeding $13.61 million in 2024, though most estates fall below this threshold. Some states also impose inheritance or estate taxes separate from federal rules.
Keep detailed records. Your inherited property's stepped-up basis is your starting point for calculating future gains. If you inherit real estate and later sell it for a profit beyond the stepped-up value, that gain gets taxed. Same applies to stocks that rise after inheritance.
The stepped-up basis only applies