Buying a property that you want to eventually pass on to your kids? Here’s how to set it up to get the most favorable tax impact.

On the other hand, if the value of the property has decreased, you won’t get the benefit of a stepped-up basis but, rather, a stepped-down basis. In other words, you would inherit your dad’s half of the property at a lower valuation. If you keep the property for another 10 years and the value suddenly skyrockets, you might pay more in tax (because you’ll pay the difference between the inherited value — the stepped-down value — and the current sales price, whenever that is). For this reason, if you are not selling the property anytime soon, you’d want to get somebody to tell you that the property’s value is as high as possible so that when you do sell down the road, you will pay taxes on the difference between the stepped-up value and the sales price of the home.

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