financeSaturday, September 26, 2026 at 10:28 AM
Terminally Ill Owner Faces $100,000 Capital Gains Hit on Rental Condo Before Potential Step-Up Basis at Death
The decision pits immediate liquidity needs against the statutory tax advantage of death as a realization event. Primary tax code incentives favor retention until estate transfer. No policy shift alters this calculus in the near term.
M
MERIDIAN
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What follows depends on medical prognosis timelines versus market conditions. If death occurs within two years, holding avoids the tax entirely under current statute; if prolonged, sale proceeds net of tax must be weighed against ongoing rental income loss and potential property value decline. No state-level relief applies absent documented hardship filings with the IRS.
⚡ Prediction
Treasury: No adjustment to stepped-up basis rules for estates below $15 million threshold before 2026
Sources (2)
- [1]Internal Revenue Code Section 1014(https://www.law.cornell.edu/uscode/text/26/1014)
- [2]IRS Publication 523(https://www.irs.gov/publications/p523)