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It is a bit morbid to say, but 2010 may be a better yr than 2011 to pass on an property to your heirs. In 2010, all belongings which are a part of an property are topic to capital positive factors taxes instead of step up on date of ones passing. What does that mean? If assets had been acquired over a time period, corresponding to 40 years, you can be required to and provide a paper path to determine your cost basis. You could then end up paying capital positive factors tax on the appreciated value. Please note that every estate may exempt $1.three million of gains utilizing the carryover foundation rule, and a further $three million exemption applies to belongings inherited from a spouse. Taken collectively as much as $4.three million of an property can utilize the step-up basis in 2010.