Step-up in Basis with Rob Overstreet – Real Estate Secret
This webinar with Rob Overstreet, the CEO of Harbor Drive Holdings was incredible! He broke down real estate secrets that most have never heard of! Using this process you can acquire cash-flowing real estate for life with no cash out of pocket! Learn more about stepped-up basis. A quick breakdown below:
Its often said that the only two absolutes in life are death and taxes. However, for savvy investors that know how to estate-plan, and have a vision for generational wealth building, there is a way around paying taxes when you pass away, setting your surviving family up to not pay any taxes on your real estate upon your passing. Estate planning is CRITICAL to any investor, as we know that you can never anticipate your last day. Let’s jump in.
A “stepped-up basis” is a tax policy that allows heirs to lower their capital gains taxes. When someone inherits property or investments, the IRS resets the market value of the investment property to the date of the previous owner’s death. When the heir sells these assets, capital gains taxes are calculated using the new valuation based on the new date. In this arrangement, which is sometimes referred to as a tax loophole, investors are able to transmit assets to their successors nearly tax-free. Consider talking with a financial professional or estate planner if you need assistance lowering your investment taxes.
What does this actually mean?
The stepped-up basis (sometimes called the step-up cost basis) is a method of reducing capital gains tax. It relates to investment assets left to heirs after a person’s death.
The IRS “steps up” the cost basis of capital assets such as stocks, mutual funds, bonds, real estate, and other investment property when someone inherits them. This implies that the IRS calculates the initial cost basis of any particular investment asset based on its value when the asset is inherited for the purposes of capital gains tax. When the heir sells the asset, they just pay money based on the gains earned since they inherited it.
The stepped-up basis loophole allows heirs to save a large amount of money on investment assets they inherit. Furthermore, this flaw is critical for estate planning. Individuals can reduce the amount of money the IRS collects from their estates by leaving stocks or real estate holdings rather than cash in their wills and trusts.
For more information, check out the video with Rob.
If you want more information on how to add passive real estate to your portfolio, where you can grow your money without working extra hours, and create generational wealth using tips like stepped-up basis in your estate planning then schedule a call with one of our team members below.