TAXES When you pass down your rental properties to your kids?

[Chue Kue]

Hello,

Just wanted to know if you guys might be able to clear some things up for me.

When u pass down rental properties to your kids when u pass away, what kind of tax are they required to pay if they decide to keep it as a rental property? Any way to structure the deal so they don't have to pay any taxes if they don't sell and just keep it as a rental property?

Thanks

Chue

[Cameron Skinner]

one of the biggest tax advantages of real estate is the fact that when you die your kis get stepped up basis.  A huge mistake sometimes people make is they gift their properties to their kids right before they die to try and avoid probate. This means they get carryover basis.  

Stepped up basis means they get the property at the fair market value on the date of your death so if they sell it so no tax but if they keep it they get to start depreciation at the fair market value less the land value for the next 27 1/2 years

Carryover basis means they get the property at whatever your basis is at the time of transfer

Hope this helps good luck