Don’t Gift Your Home to Your Kids: The $750K Tax Mistake! Estate planning attorney Harry Margolis warns families about a costly step-up in basis estate planning mistake that can trigger hundreds of thousands in unnecessary taxes. Many parents gift their homes to children during their lifetime to avoid probate or nursing home recovery, but this strategy can backfire.

For example, if your parents bought a home for $250,000 and it’s now worth $1 million, gifting it means you inherit their $250,000 basis. When you sell, you owe capital gains taxes on $750,000 of profit—potentially $150,000 to $200,000 or more. By contrast, inheriting the home provides a “stepped-up” basis to $1 million, meaning little to no capital gains tax when sold.

This rule applies not only to real estate, but also to stocks, mutual funds, business interests, and collectibles—though not to retirement accounts like IRAs and 401(k)s. The step-up in basis is a powerful tool that protects ordinary families from crushing tax bills.

Margolis cautions that premature gifting sacrifices this benefit, leaving heirs with massive tax liability. Instead, families should carefully evaluate long-term care concerns, maintain control over their property, and work with an estate planning attorney before making any transfers.

The bottom line: Don’t let well-meaning but bad advice erase one of the most valuable estate planning tax benefits available. Preserve the step-up in basis to minimize taxes and maximize your family’s inheritance.

Watch this video, Don’t Gift Your Home to Your Kids: The $750K Tax Mistake to learn more and find more videos featuring Harry Margolis at this link: https://www.finstream.tv/featured/harry-margolis/. Harry’s book, Get Your Ducks In A Row is available on Amazon: https://www.amazon.com/stores/author/B001KDASYO/allbooks?ingress=0&visitId=c74c3f93-02b6-4ec5-b42c-fc6c548c379d