Angel of Death Tax Break
— -- Did you sell any property last year that you had inherited from someone?What about stocks or bonds? If so, you may get a tax break that proves that death and taxes don't always go together.
When someone dies, the tax on the profit that has built up in their investments usually bows out, too.
"Assume that stock your Dad bought for $10,000 was worth $100,000 when he died and left it to you. And, let's say you sold it last year for $101,000. You owe tax only on the $1,000 of appreciation after you inherited it," said Kevin McCormally of Kiplinger's Personal Finance magazine.
McCormally said the rest is wiped out by what he calls the "angel of death tax break."
He added: "This also works for property owned jointly with someone, the way husbands and wives often own investments. In that case, when one spouse dies, the tax on at least half the profit is forgiven. One thing this break doesn't cover, unfortunately, is inherited retirement accounts, like regular IRAs and 401(k)s."
Click here for interactive tax explainers and calculators
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