What is the basis of inherited property generally stepped up to?

Inherited property is generally stepped up to its fair market value at the time of the decedent's death, which means that the value of the property for tax purposes is adjusted to reflect the current market conditions rather than the original cost paid by the decedent. This adjustment is beneficial for the heir because it reduces potential capital gains tax if the inherited asset is later sold. For example, if a property was originally purchased for $100,000 but has a fair market value of $300,000 at the time of the decedent's death, the heir's basis in the property becomes $300,000. This step-up in basis is a vital tax concept that helps mitigate the tax liability on properties that have appreciated significantly over time.