Updated 19 days ago on . Most recent reply
1031 Exchange Question
Hello, I finally think I can post. New to BP. Inherited a property/rental 30 years ago from my mother. If we sell and take the proceeds do we have to pay the capital gains or do we have to do the 90 days to find a likeable property to do the 1031 exchange? I have an accountant saying if we take the proceeds we are subjected to the capital gains and should do the exchange. Where I have other people I know that claim if inherited from a parent you do not have to pay. Any help would be appreciated and I realize I may need to ask a real estate attorney/tax attorney. Thank you.
Most Popular Reply
@Brian Hoerner, hi. Great question. When you inherit a property, you get a step-up in basis to the value at the date of death. So you are not taxed on the original purchase price, only on appreciation since inheritance.
- If you sell → you may owe capital gains on post-inheritance appreciation
- A 1031 is optional (only if you want to defer those gains)
Your accountant is partially right,but you are not automatically taxed on the full gain.
Happy to help you estimate your actual exposure before you decide.