What Happens When There’s No Will? A Widow’s Story
- By Jim Blackburn
- on
Client Profile:
- Name: Kevin
- Age: 51
- Occupation: Electrical engineer
- Goal: Sell inherited family home without paying massive capital gains
- Location: San Diego, CA
The Situation
Kevin inherited his childhood home after his mother passed away. She had purchased it in 1984 for $96,000. The home was now worth $570,000.
Kevin wanted to sell it to settle her estate and reinvest the proceeds — but he was concerned about taxes.
He’d heard horror stories of people paying huge capital gains taxes on inherited properties. Fortunately, we introduced him to the concept of the step-up in basis — and it saved him a small fortune.
The Strategy
We worked alongside his real estate agent and tax advisor to:
- Confirm the fair market value (FMV) of the property at the date of death
- Establish his new cost basis at $570,000
- List and sell the home for $582,000
- Pay minimal selling expenses and no capital gains tax
The Tax Savings Breakdown
Without Step-Up | With Step-Up |
Basis: $96,000 | Basis: $570,000 |
Sales Price: $582,000 | Sales Price: $582,000 |
Capital Gain: $486,000 | Capital Gain: $12,000 |
Estimated Tax (15%) | ~$72,900 |
Savings | ~$71,100 |
After expenses and taxes, Kevin walked away with over $545,000 in proceeds — almost every penny intact.
What Kevin Said
“I had no idea what a ‘step-up in basis’ even was. I just thought I’d owe taxes on everything. You guys saved me from giving away over $70,000 unnecessarily.”
Takeaway for Readers
When you inherit a property, your tax liability resets — but only if you know how to document it. Understanding the step-up in basis is one of the most powerful tools for protecting family wealth.
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