No , heirs get a "Stepped Up Basis " and would not pay taxes at time of acquisition !

Hi Client -- that's a great question for your tax professional or for a qualified intermediary.  Do you need a referral?   

I don't think so but would want to consult a tax professional. And what about probate?

This is a great question for the cpa.

Fred, that's a great question - wish we had some CPA members who could answer that. Now I'm curious! I just Closed another one of those recently and should have asked the facilitator but, didn't think of it. 

Parked for answers...

Michael Jacobs nailed this one!

I leave that to tax professionals as i dont want to quote wrong. 

Don't know enough about these to opine. In 25 years have never had a client do one of these exchanges. This is the type of question I would automatically refer to an accountant and attorney.

I would say absolutely yes and also - ask an accountant.

I'm not sure about this specific statute, and I would definitely consult a CPA who specializes in estates and/or estate attorney.

You may find some sections of this article come in handy (I wrote for one of my clients) Selling an inherited home to settle an estate.  It also links to some other helpful articles on the subject.

In general, when someone dies, you may have 2 different types of taxes:  1) inheritance tax and 2) capital gains tax on property sold.

For #1, it depends on amount of estate and state you live in.  For most (but not all states), I believe there is no inheritance tax if total estate is less than $5 million (and that includes value of home).  I believe this tax is due 9 months after date of death (...but, if the house isn't sold by then, it prob would not include that portion of it...nor the amount held back in probate to maintain house/pay executor, etc.).  check w/ attorney - varies by state.  Also, I believe this applies if both parents deceased and married at date of death.  check w/ atty.

On 2nd part, I'm not familiar w/ replacement property/what that means.  But, as it relates to capital gains tax, that is based on selling price less expenses vs. appraised value at date of death (not purchase price).  This is why executor is supposed to get some sort of appraisal at time of death (could be official appraisal or CMA from real estate agent...for very large estates, most likely official appraisal needed).  Also, BTW, this usually means tax is lower if sold after death (vs. if sold before it's based on purchase price which is usually lower, esp for inherited properties since majority were purchased a while back).

Hope that helps a bit.

PS:  I'm not a lawyer, but my dad was an estate attorney.

I think not also. My understanding is that your heirs get to start the full basis all over again.

Fred Griffin - well, thanks to both Michaels.

 Michael J. Perry is good and so is Michael Jacobs .

I hope you stop back with the info that the CPA provides, as Ryan Huggins - Thousand Oaks, CA mentioned thinking a Trust may help but I always refer to professionals like you are doing.

I'm with Michael Jacobs on this.  Plus, putting the property into a trust and that helps with a lot of things.

This is a fantastic question! I believe what Michael said is probably spot on, but would defer to the tax professional of the heir.

As others have already pointed out and remember that the property will received a to  'Stepped-up' valuation and most likely also be subject IRS taxes for that.

Great question for a tax attorney or CPA. Think heirs mmay get a step up in basis! 

My understanding is taxes due on sale, unless that sale is another 1031 EX.

This may be one of those times when we should hire a professional to assist us.

I would say not until it's sold. Your link really doesn't answer the question at all.

No idea.

Check it out with a CPA!

Michael has it.  I have some property that I just did this with.

I chugs right along.

Fred great question. As Michael stated I'm pretty sure it's a stepped up basis but I'd be calling my CPA for details - or have the client cal the CPA.

Interesting question and one I would refer to a CPA. 

That is a tax and legal question ... consult with your attorney or accountant. I am happy to refer you to resources if you need them. 

Depends on who is president at the time ;)

beyond my paygrade....that's why I have a CPA...

They should seek advice from their CPA.