Need advise on determining basis on property gifted from g-parents to calculate capital gains

Question

Is it true when one spouse passes away the assets/ property/land held in a marital trust are inherited by the surviving spouse and the property at this point receives a step up basis?   
If I was gifted this property and I sale it, would this be the basis for calculating the capital gains?

James L. Arrasmith · Answer

When you receive property as a gift from your grandparents, the basis for calculating capital gains is typically the same as what your grandparents had in the property. This is known as a carryover basis. If the property's fair market value at the time of the gift is less than the original basis, and you sell it for less than that value, you might be able to use the lower fair market value as your basis instead. 
 
Regarding marital trusts, when one spouse passes away, the surviving spouse usually inherits the assets held in the trust. At this point, the property often receives a step-up in basis, meaning its basis is adjusted to the current market value at the date of the first spouse’s death. This can significantly reduce any capital gains tax if the property is later sold. 
 
If you were gifted the property rather than inheriting it, the basis for calculating capital gains would remain the original basis from your grandparents, not the stepped-up value. When you decide to sell the gifted property, you would subtract this original basis from the sale price to determine your capital gain or loss. It’s important to keep accurate records of the original basis and any improvements made to the property to ensure correct calculations.

Q: Need advise on determining basis on property gifted from g-parents to calculate capital gains