Sadly, I received a call from a friend who recently lost her loving and devoted husband of 51 years now and needs a current real estate valuation for her exceptional family home. Known as a "stepped-up basis," evaluating a home for value involves a quick walk-thru of the house, a discerning eye, a deep-dive market analysis, and ultimately a REALTOR'S®/Appraiser's professional opinion. However, the time to get a "stepped-up basis" is limited. Consequently, the estate attorney's sage advice to act sooner, rather than later to establish a new base value is timely. . . and Sarah and I are more than happy to help.
For those unfamiliar with the concept, a "stepped-up basis" creates a new baseline value for a property, as opposed to the purchase price on the tax records, often from years ago. . .
For those who have lived in their homes for decades, their original purchase price is likely a small percentage of their home's current market value which means the tax implications can be HUGHELY significant with respect to selling.
As one stark example, I know a charming couple who bought their one and only Piedmont home as young newlyweds fresh out of CAL Berkeley and are now in their 80s. Sixty years later, that modest "starter" home is worth more than $2.5 million. Their original purchase price had been (drum roll please) a mere $14,000 (that's not a typo - $14k). Even with $500,000 of tax-free capital gains currently allowed by the government ($250,000 each), should this couple ever decide to downsize, they'd pay taxes on their net profit - and that's a LOT to willingly hand over to Uncle Sam (not that he wouldn't be thrilled to take it).
Because well-maintained homes in high-end neighborhoods have appreciated by MILLIONS of dollars (not thousands) many seniors will opt to wait for a "stepped-up basis" event before selling. If one spouse predeceases the other, OR if both parents pass while still owning the home, and the property is inherited by their children, a "stepped-up basis" provides relief for the heirs, including NOT strapping the survivors with capital-gains taxes that force the sale of the home. (Please speak with a real estate attorney or certified CPA for more information about the stepped-up basis laws.)
As an aside, whether you agree with the concept of "generational wealth," most of us have worked hard to get a toehold into the real estate market; thus it behooves homeowners to know the rules around such things. You are certainly welcome to sell at any time and pay the capital-gains taxes (and many people do), but understanding the implications may save your family hundreds of thousands of dollars in the end, and that's where your REALTOR® comes in (in conjunction with your trusted attorney, estate planner, or CPA).
Because Sarah, Jill, Kate, and I are delivering toffee this week (and next) and having conversations around all manner of real estate related questions, it's a reminder of how many things experienced Agents do beyond the basics of helping Buyers buy and Sellers sell . . . (although make no mistake, transacting real estate IS our bread and butter).
So here's our TOP TEN list of the many ways Agents can, and should be called upon:
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.