STEPPED-UP BASIS

A tax term that determines profit and loss for a property that is sold. When a person inherits property that has increased in value over the cost of the property to the deceased, the new property owner’s cost or tax basis is the market value of the property at the time of the death of the decedent. The stepped up basis is beneficial to the new owner since the profit on the sale of the property will be less than if the cost of the original owner was used.