The step-up in basis is the single largest tax benefit available to heirs of appreciated property. Without it, decades of accumulated gain would be taxed when the heir sells. With it, only post-death appreciation is taxable — often a small or negative number for heirs who sell within a year or two of inheriting.
Related terms
Probate
The court-supervised process of validating a will, paying the deceased's debts, and transferring remaining assets to heirs.
Inheritance Tax
A state-level tax paid by the heir on the value of property received from a deceased person.
Estate Tax
A tax on the gross estate of a deceased person, paid by the estate before assets are distributed to heirs.