What is involved in a step-up in basis?

A step-up in basis is a concept in West Virginia inheritance law that applies when an heir receives property from a deceased person. It is meant to ensure that the value of the property will not be taxed two times, once when the deceased person transfers the property to the heir and then again when the heir sells it. The concept is based on the idea that the value of the property received by the heir is higher than the amount paid by the deceased person. This difference in value is called the “step-up in basis”. When the heir goes to sell the inherited property, the basis (or value) for calculating the capital gains tax is the “stepped-up” value rather than the original purchase price. This means the heir will only owe taxes on the gain made since inheriting the property. For example, if a person inherits a piece of property that was purchased for $100,000, but is now worth $200,000, they will not get taxed on the entire $200,000. Instead, the stepped-up basis would be $200,000 and the heir will only pay capital gains taxes on the $100,000 increase in value. In addition to this, West Virginia inheritance law may also allow additional exemptions to an heir, such as exempting them from paying the capital gains tax on the first $500,000 of their inheritance. This exemption is meant to help heirs who may not be able to afford large tax bills.

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