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March 26, 2023
Question

What is the basis of gifted real property subject to a life estate.

  • March 26, 2023
  • 1 reply
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In 2015 my wife's father gifted real property to my wife subject to a life estate retained by the father.  The property was sold in 2022 at which time the father relinquished his life estate.  What effect, if any, does the life estate have on calculating the cost basis of the property? 

    1 reply

    Hal_Al
    Employee
    March 26, 2023

     Q.  What effect, if any, does the life estate have on calculating the cost basis of the property? 

    A. None.  Had the property been sold after the holder of the life estate died, it would make a big difference.

     

    Q.  What is the basis of gifted real property subject to a life estate.

    A. The same as any gift, the givers cost basis transfers to the recipient.