Did you know Biden wants to get rid of something called “stepped up basis”??? How does this affect you!? When your parents pass and leave you the family house normally you would inherit that property at what it is worth today. If you were to sell that house you would only pay taxes on the gain from what it is worth today and what it sells for. If Biden does away with “stepped up basis” you will inherit the property for what your parents paid for the property. If you decide to sell you will pay taxes on the difference between the original purchase price and what it sells for today. Our kids need to be aware.
Here is what this looks like!
Current Policy
Inherited House at Current Value – $200,000
Sells for $205,000
Taxable income = $5000
Taxes Due – 20% of $5000 = $1000
Profit to you = $204,000
Biden Policy
Inherited House at original purchase price – $40,000
Sells for $205,000
Taxable income = $165,000
Taxes Due – 20% of $165,000 = $33,000
Profit to you = $172,000
If your parent were to have sold this property prior to passing they would have paid no taxes because it was their primary residence.
So much for helping the middle class get ahead.
***My educated guess would be that at least 95% of Americans don’t even know Biden has proposed this. We are talking tens of thousands of more tax dollars for the average sold after inheritance! Wow, google “Biden stepped up basis” and educate yourself because this is a biggie!