Does inheritance count for 1031 Exchange?

[Mindy Jensen]

A friend inherited his grandmother's property through his mother's estate. He'd like to sell in the Spring and is asking about a 1031.

I think since it is inherited, the cost basis is reset to today's value, and he can sell and pay no cap gains taxes, which is better than 1031. But I've long since learned that I don't know enough about 1031 Exchanges to give solid advice. 

[Dave Foster]

@Mindy Jensen, Yep there is a step up in basis.  Of course that doesn't mean that there hasn't been appreciation significant since the estate was settled.  But probably he can sell with no or little tax consequence.  He just needs to take the probate settlement to his accountant to verify his basis right now and compare that to a possible sale price.  

If there's gain then a 1031 could defer it.