Step up cost basis on a house

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  • #3771
    Lilac
    Participant

    I am a recent widow lives in California. Some people told me to appraise the house for step up cost basis. Some people said it is not neccesary unless I am selling the house now.

    If I do want to hire an appraisal, some people said the step up cost basis is only 50% of the value of the property because the other 50% is mine.
    Some people said the step up cost basis is 100% because of community property rule in California.
    Please help clarify me on this . Thanks.

    #3772
    kaneohe
    Participant

    I don’t know the official answer so you may want to see a lawyer.

    In the strictest interpretation, if you held title as jt. tenants, the basis is stepped up on only on half the property.
    https://www.ca-trusts.com/jointtenancy.html

    “When a married couple owns an appreciated asset as community property, the surviving spouse will get a step-up in the cost basis to the fair market value at the date of death of the other spouse. ………………. But if the residence is held in joint tenancy, it is more likely that some capital gains tax may be due because only half of the property receives a new basis”

    If you held title as community property or in a jt revocable living trust, you would also get a full step up in basis.

    If you had a community property agreement, you might also get a full step up in basis. https://www.ssslaw.com/practice-areas/estate-planning/wills-trusts/community-property-agreements/

    “In the absence of a community property agreement, California law generally allocates ownership of marital property as follows:

    Assets acquired prior to the marriage are retained by their individual owners;
    Assets acquired during the marriage are community property (both spouses have equal ownership interests), except;
    Assets acquired by gift, inheritance, or bequest during the marriage remain the sole property of their recipient.”

    So the question is if the property is actually community property but is not titled as such, how is it handled in the absence of a community property agreement? I don’t have a link but I seem to recall that someone got property titled as jt ownership classified as community property after the first spouse’s death by filling out some document…..
    perhaps a lawyer would know.

    another interesting article: https://www.cpajournal.com/2017/08/18/greatest-hits-community-property-step-basis/

    #3775
    Lilac
    Participant

    Thank you so much.
    Our house is in jt revocable living trust.
    I really appreciate this.

    #3778
    kaneohe
    Participant

    Sorry…..I may have given you too much confidence. Sounds like your situation may be like ours. It was JTWROS until we got the jt revocable living trust and community property agreement and retitled into trust. I was under the impression that there was a full basis step up on first death……and perhaps there still is.

    However in trying to find a reference for that for you, I ran across some
    old messages that at least one person had some doubts.

    Perhaps you could go to one of these free living trust seminars and ask
    your question there. Or maybe several to make sure you get the same answer.

    #3782
    Lilac
    Participant

    I am not too worry about it as I am not selling my house now, just a question popped up in my head. I did get 100% step up cost basis on all our investment accounts. Just wandering if the house is the same.
    I think I will need to appraise the house now for the future when I want to sell the house either for the benefit of full or half of the step up cost basis.
    Maybe spending around $400 now is worth it rather than years down the line I have to back track to find the value of the house when my husband passed.
    Thanks again.

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