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Choc wrote:
> The only way to avoid having somebody pay taxes on the
> gain is to die owning the property and the heirs get a step up
> in basis to the date of death value.

Nitpicking, but won't the gain in that case be subject to estate tax? Although in most cases there won't be any tax due due to the unified credit (basically a standard deduction for estate tax, which I think is $1,000,000 at the moment.

No. The entire value at death is subject to estate tax, not the gain (or loss). If the total value of all assets, net of liabilities, is less than $1M, not federal estate tax is due. State rules may vary.

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