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Tax Planning/Capital gains in an estate



I have a question about capital gains related to selling real property while it is part of an estate.

For example, a person passes away and owns a house.  The person paid $100,000 for the house.  While the house is still titled in the deceased person's name, the executor sells the house for $150,000.  The person who would have inherited the house gets the $150,000 cash instead of getting the house.

1.  Does the deceased person or the beneficiary show a $50,000 capital gain on their tax return?  Or is there no capital gain because the basis is 'stepped up' because the owner is deceased?  I didn't know if title had to pass to the beneficiary to trigger the stepped up basis rules.

2.  Is the answer different if the house was not the deceased person's primary residence?

And one more question about capital gains/losses.  If a deceased person has $7000 in capital loss carryforward, is there any way to take that entire $7000 on their final tax return?  Or can they just take $3000?  It seems unfair for them to not be entitled to the losses just because they passed away.

Thanks so much!

Fay - Was the property in a trust? I will assume "no" since you used the word "executor."

The beneficiaries of the estate technically own the property and get a stepped up basis.  The gain or loss is applied on each beneficiary.

Deceased person no longer has any capital gains carry-forward; it dies with them on their final return.

I hope this helps.

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