About the Step-Up in Basis Calculator
This step-up in basis calculator works out the cost basis of property you inherit and the capital gain and federal tax when you sell it. Under IRC §1014, inherited assets generally take a basis equal to their fair market value on the date of death (or the alternate valuation date), so appreciation during the decedent’s lifetime is never taxed as income. Enter what the decedent paid, the value at death and your sale price to see the stepped-up basis, your taxable gain and how much tax the step-up saves compared with keeping the original basis.
It handles the ownership situations that change the answer most: a sole owner (full step-up), community property between spouses (both halves step up), joint tenancy with a spouse (only the decedent’s half steps up) and joint ownership with someone other than a spouse (the decedent’s contributed share steps up). It also applies the §1014(e) rule that denies the step-up when you gave appreciated property to the decedent within one year of death and get it back.
Tax is estimated with the 2026 long-term capital gains brackets from IRS Rev. Proc. 2025-32 for single or joint filers — inherited property is always treated as held long term. The estimate excludes the 3.8% net investment income tax, state income tax and depreciation recapture on rental property, which you should add where they apply.
With the default inputs, the your stepped-up basis is $800,000.00. Change any value above to recalculate instantly.
How to use the step-up in basis calculator
- 1Choose how the decedent held the property (sole, community, or joint).
- 2Enter the original adjusted basis and the value on the date of death.
- 3Enter your sale price, selling costs and any improvements you made.
- 4Choose your filing status and other taxable income for the year of sale.
- 5Compare the stepped-up gain and tax with the no-step-up figures.
Formula and method
The part of the property included in the decedent’s estate (p) takes a basis equal to its fair market value at death; any part that already belonged to a surviving joint owner keeps its share of the original basis. For a sole owner p = 1. For community property, §1014(b)(6) treats the surviving spouse’s half as acquired from the decedent too, so p = 1. For spousal joint tenancy, half is included in the estate (p = 0.5). For a non-spouse joint owner, the decedent’s contributed share is included. If the property is worth less than the original basis at death the basis steps down. If you gave appreciated property to the decedent within a year of death, §1014(e) keeps the old basis.
The gain is the amount realized (sale price minus selling costs) minus the new basis and improvements you add. Inherited property is long-term regardless of how long you hold it, so the gain is stacked on your other taxable income and taxed at the 2026 0%/15%/20% rates (the 0% rate ends at $49,450 single / $98,900 joint and the 20% rate starts above $545,500 / $613,700). The tax shown is the increase in federal tax caused by the sale.
- p
- Share of the property included in the decedent’s estate (stepped up)
- FMV
- Fair market value at date of death (or alternate valuation date)
- B
- Original adjusted basis of the whole property
Worked examples
Inherited home bought for $200k, worth $800k at death, sold for $850k
As sole owner the decedent’s whole basis steps up to $800,000, so only the $50,000 of growth after death is taxable. With $100,000 of other joint taxable income (already past the $98,900 0% zone), the gain is taxed at 15% = $7,500. Without the step-up the $650,000 gain would cost $104,315 ($513,700 at 15% plus $136,300 at 20%).
Surviving spouse, joint tenancy, sells for $900k with $50k costs
Only the decedent’s half steps up: $450,000 (half of $900,000) plus the survivor’s $150,000 half of the original basis gives $600,000. Net proceeds of $850,000 leave a $250,000 gain, taxed at 15% = $37,500.
Same couple in a community property state
Community property gets a full step-up on both halves, so the basis is $900,000. Selling for $850,000 net of costs produces a $50,000 loss and no tax — compared with $84,315 if the $300,000 original basis had carried over.
Gift to a dying parent returned within a year
Because the heir gave the appreciated asset to the decedent within one year of death, §1014(e) denies the step-up and the $50,000 basis carries over. The $350,000 gain is taxed at 15% for a single filer with $60,000 of other income, or $52,500.
Frequently asked questions
What is a step-up in basis?+
When you inherit an asset, its cost basis is generally reset to its fair market value on the date of death under IRC §1014. Appreciation that built up while the decedent owned it is never subject to income tax; you only pay tax on growth after death.
Do both halves of a married couple’s home get a step-up?+
Only in a community property state (such as California, Texas, Arizona or Washington) when the home is community property. With joint tenancy or tenancy by the entirety elsewhere, only the deceased spouse’s half steps up and the survivor keeps half the original basis.
Is the gain on inherited property short-term or long-term?+
Always long-term. IRC §1223(9) treats inherited property as held for more than one year, so even if you sell it a week after the death you qualify for the 0%, 15% or 20% long-term capital gains rates.
How do I prove the value at the date of death?+
Use a qualified appraisal as of the date of death for real estate, the average of the high and low trading prices on that date for listed securities, or the value reported on Form 706 or Form 8971 if an estate tax return was filed. Keep the documentation with your records.
Can an inherited asset have a step-down in basis?+
Yes. If the property was worth less than the decedent’s basis at death, your basis is the lower fair market value, and the decedent’s unrealized loss disappears. Selling losers before death can preserve the loss for the owner.
Do assets in a revocable living trust get a step-up?+
Yes. Assets in a revocable trust are included in the grantor’s estate, so they receive a step-up at death. Assets in most irrevocable trusts that are excluded from the estate do not, and retirement accounts such as IRAs never get a step-up.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.
Sources
- 26 U.S. Code §1014 — Basis of property acquired from a decedent
- 26 U.S. Code §1223 — Holding period of property
- IRS Publication 551 — Basis of Assets (Inherited Property)
- IRS Publication 555 — Community Property
- IRS Topic 409 — Capital gains and losses
- IRS — Revenue Procedure 2025-32 (2026 capital gains breakpoints)