The Power of the Step-Up in Basis for Legacy Wealth

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Real estate is one of the most powerful ways to build generational wealth.
 But there’s one lesser-known tax rule that can quietly protect that wealth and pass it on — almost tax-free.

It’s called the step-up in basis — and if you own property, you need to understand it.

It could mean the difference between your heirs paying nothing in taxes… or owing tens of thousands.

What Is a Step-Up in Basis?

When you pass down an asset (like a house), the “basis” is what determines capital gains tax.

  • If you bought the house for $200K, that’s your basis
  • If it’s worth $500K when your heirs inherit it, the gain is $300K
  • Normally, that gain would be taxed if sold

But with a step-up in basis… your heir’s basis becomes $500K — the value at time of death
 So if they sell it immediately? No capital gains tax owed

How It Builds Legacy Wealth

This strategy helps your heirs:

  • Inherit the full market value
  • Avoid unnecessary capital gains taxes
  • Keep or sell the home with flexibility and peace of mind

And it helps you:

  • Transfer your equity tax-efficiently
  • Ensure your lifetime gains aren’t drained by IRS bills
  • Leave behind usable wealth, not taxable burden

What Types of Property Qualify?

  • Primary residence
  • Investment properties
  • Land
  • Vacation homes

As long as the property is part of your estate, the step-up can apply.

(Trusts, LLCs, and other structures may affect this — ask your advisor.)

How to Maximize the Step-Up Strategy

  • Hold appreciated property until death, when appropriate
  • Use a revocable living trust to simplify inheritance
  • Avoid gifting appreciated property during your lifetime — it locks in the old basis
  • Coordinate with your mortgage advisor and financial planner for a full legacy plan

Bottom Line: Real Estate Can Be a Tax-Free Gift — If You Plan It Right

You worked hard to build equity.
 Let’s make sure your family keeps it — not the IRS.

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