Michigan Step Up In Basis

It is not legal advice. Verify current requirements with the county probate court, relevant agency, or qualified Michigan counsel before acting.

Michigan step up in basis questions usually arise when an heir sells an inherited home, investment account, business interest, or trust asset. The basis rule is federal, but Michigan families still need good date-of-death records.

This guide provides general tax information, not tax advice. Ask a tax professional before selling inherited property or filing a return.

What Step-Up In Basis Means

Basis is the amount used to measure gain or loss when property is sold. The IRS explains basis rules in Publication 551. For many inherited assets, federal law uses fair market value at the owner's death as the new basis.

Here is how it works: if a parent bought a Michigan home for $80,000 and it was worth $280,000 at death, the heir may use the date-of-death value as the starting point for later sale gain. Sale costs, improvements, and later price changes can still matter.

Assets That Often Need Basis Records

Keep basis records for:

Michigan homes and vacant land
Rental or vacation property
Brokerage accounts
Closely held business interests
Vehicles, art, collectibles, and jewelry
Trust property included in the taxable estate

Retirement accounts often follow different income-tax rules. Traditional IRA and 401(k) withdrawals can be taxable income to beneficiaries.

Michigan Tax Context

Michigan does not have a current inheritance tax for modern deaths. Michigan Treasury states that inheritance tax applies only for people who inherited from someone who died on or before September 30, 1993.

Federal tax rules can still apply. Very large estates may need federal estate tax review. Beneficiaries may also owe federal capital gains tax if they sell inherited property for more than their adjusted basis.

Read Michigan estate tax and inheritance tax for the wider tax overview.

How To Document Value

Get value support as close to the date of death as possible.

Asset	Useful record
Real estate	Date-of-death appraisal, comparable sales, closing statement
Securities	Brokerage date-of-death statement
Business	Valuation report, buy-sell records, financial statements
Personal property	Appraisal, sale records, insurance schedule

County assessed value may not match fair market value. If the asset has meaningful value or is likely to be sold, a formal appraisal can prevent future tax disputes.

Trusts And Joint Ownership

Assets in a Michigan revocable living trust may still receive basis treatment tied to the grantor's death if the asset is included for federal estate tax purposes. Irrevocable trusts need closer tax review because the answer depends on the trust terms and retained powers.

Jointly owned property can also be more complicated. A surviving co-owner may receive a new basis only for the deceased owner's share, depending on ownership and tax facts.

Sale Planning

Before selling inherited property, gather the death certificate, probate or trust papers, deed, title records, statements, and valuation support. Track sale expenses and improvements after death.

For real estate transfer steps, read transfer property after death in Michigan. For estate records during administration, read Michigan probate accounting.

Sources:

Title: Publication 551, Basis of Assets. Publisher: Internal Revenue Service. Publication Date: current IRS publication page. URL: https://www.irs.gov/publications/p551
Title: Estate and Gift Taxes. Publisher: Internal Revenue Service. Publication Date: current IRS topic page. URL: https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes
Title: Inheritance Tax Frequently Asked Questions. Publisher: Michigan Department of Treasury. Publication Date: not listed. URL: https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/inheritance-tax-frequently-asked-questions
Title: MCL 700.7602, Revocation or amendment of revocable trust. Publisher: Michigan Legislature. Publication Date: Michigan Compiled Laws current through PA 14 of 2026. URL: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-700-7602

This guide provides general Michigan step-up in basis information. Verify inherited-property tax treatment with a CPA, enrolled agent, or tax attorney.