Biden wants to remove the "stepped up basis" which would NOT be good for middle class Americans.
Why would this not be good? If you inherit your family's home today, you inherit that property at w... View MoreBiden wants to remove the "stepped up basis" which would NOT be good for middle class Americans.
Why would this not be good? If you inherit your family's home today, you inherit that property at what it is worth today. If you sell that house, you only pay taxes on the gain from what it is worth today and what it sells for.
Doing away with "stepped up basis" means you inherit the property at the VALUE YOUR PARENTS ORIGINALLY paid for the property, NOT at its current value. So, if you decide to sell you will pay taxes on the difference between the ORIGINAL purchase price and what it sells for today.
EXAMPLE:
Current Policy
Inherited House at Current Value - $200,000
Sells for $205,000
Taxable income = $5000
Taxes Due - 20% of $5000 = $1000
Profit to you = $204,000
Biden Policy
Inherited House at original purchase price - $40,000
Sells for $205,000
Taxable income = $165,000
Taxes Due - 20% of $165,000 = $33,000
Profit to you = $172,000
So much for helping the middle class get ahead.