Estate Planning for Heirs

If a taxpayer has done a 1031 Exchange in the past, they will have deferred taxes due upon the sale of this property. If the taxpayer were to perish, their heirs will inherit the property with a stepped-up basis. All of the gain in that property disappears upon the taxpayer’s death.

If the heirs were to now sell this property, there would be no capital gains due, as opposed to what the taxpayer would have paid if they would have sold without an exchange before their death.

The 1031 Exchange is an important tax planning tool for real estate investors.

For more information, please reach out to your tax professional for specific questions or contact the specialists here at Security 1st Exchange for assistance.