Legal Question in Tax Law in California

I'm passing on my share of a rental property to a son. It has a very low basis as I've owned it for more than 30 years. Hence, when he sells it there will be substantial capital gains. I've heard of something called a "tacking on holding period" whereby my son could turn around and sell his interest in the property in a week, month, or any period short of a year and still be eligible to pay long-term capital gains on the sale. Is this true? Is it applicable to rental property? Are there any pitfalls to look out for if this is indeed ok with the IRS?


Asked on 10/20/11, 9:55 am

1 Answer from Attorneys
Donald Field Donald L. Field, Jr., Attorney at Law

Yes, there is a carryover of both the tax basis and the holding period. I recommend that you consult with a qualified tax & estate planning attorney to review your plan and provide specific recommendations (including possible alternate methods of accomplishing your goal of transferring your share to your son).

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Answered on 10/23/11, 7:42 am


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