Dr. Friday uses this final live radio broadcast to focus on tax planning before major life events, especially selling property, inheriting real estate, transferring family homes, and updating estate documents. She explains why basis, appraisals, trusts, POD designations, and powers of attorney matter before a family is forced to sort things out after the fact. The episode also includes caller questions on inherited property and prize winnings, plus reminders about marketplace insurance, Medicare IRMA, IRS identity checks, and business recordkeeping. Summary Points Home sale basis: Dr. Friday reviews the primary residence exclusion, explains that the old rollover rule is gone, and reminds homeowners to document major improvements that increase basis. Inherited property: She explains step-up in basis, why the date-of-death value matters, and why appraisals can be stronger support than rough comparable sales after repairs are made. Final live radio show: Dr. Friday tells listeners the show is moving off 99.7 and toward DrFriday.com, where she plans to keep answering questions and sharing tax education. Family property transfers: A caller asks about homes titled in her parents’ names, a long-running purchase arrangement, quitclaiming property, and how inherited homes differ from property she has been buying. Estate documents and gifting: The episode covers trusts, wills, POD designations, powers of attorney, probate risk, and situations where beneficiaries used gifts after taxes to honor a parent’s wishes. Prize taxes and records: Dr. Friday discusses lottery withholding, St. Jude home raffle tax questions, 1095-A marketplace repayment surprises, Medicare IRMA, IRS identity checks, mileage logs, receipts, and home-office rules. Episode FAQ Q: Do I owe capital gains tax just because I inherit real estate? A: Dr. Friday explains that inherited property generally receives a stepped-up basis, so capital gains usually become an issue when it is sold for more than its date-of-death value. Q: Do repairs after inheriting a home increase the inherited value? A: She says the inherited value is based on the condition and value at death, so later improvements should be tracked separately and the original value should be well documented. Q: Why should estate documents and POD designations be updated? A: Dr. Friday explains that courts and financial institutions follow the paperwork, so outdated documents can leave beneficiaries trying to fix things later with gifts and tax filings. Transcript 00:01 No, no, no. She’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the how-to girl. It’s the Doctor Friday show. If you have a question, Question for Dr. Friday, call her now. 737-WWTN. That’s 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday. Dr. Friday and the doctor is in the house. We are here today to take calls talking about taxes, talking about maybe making some planning. You know, taxes are great, but normally we’re doing taxes after everything’s already happened. So if you’re really thinking about taxes, you’re probably thinking about 2026. You need to put some plans into play to say, how am I going to pay less in taxes? Can I pay less? Is it better to pay more today and pay less later? If I sell this, if I inherit this, if I convert this, will any or all of these be good or bad things? Again, I don’t really have the perfect answer for you because I don’t know what you’re going to buy, sell, or trade. But if those are things that you’re thinking about, then those are the kinds of things you do need. 01:18 to make sure that you’re accounting for. I’ve had more than one person come in and they have sold their primary home or they’ve sold a piece of real estate Or even inherited property. And they’re like, well, I I shouldn’t owe any taxes, but you know, just because you people tell you you don’t owe taxes doesn’t always mean you don’t owe taxes. So, I mean, you can sell your primary home, but if you sell it for $800,000, you purchased it for $200,000 and you’re a single individual. There is a one-time exclusion of 250,000. Well, 200 plus 250 does not equal 800,000 So you would end up with a capital gain situation. And for any of you are sitting there thinking, but wait, as long as I spend the money within the next two years or put the money back into another piece of real estate, I don’t have to pay the taxes. That tax law died a long time ago. That was something that was actually back in the early 2000s that has not been in existence for a long time. Tax law now is if you sell your primary home You can take your original cost basis and that would include the land and some people built their own homes. And then any major improvements that would have increased the value of the home. 02:36 For example, an extension, or if you’re on piece of property and you built some barns or um or you gutted the kitchen so you purchased the house back in the 80s and and then you redid the kitchen um now that would be a better upgrade so therefore the house would be worth more money so Those are the kinds of things. So also for all of you that are listening, you might want to think about if you’re actually living in a house that you own or purchasing along with the bank for most of us. You might want to document those things, right? Because I have people that’s lived in their homes for 20, 30 years. And let’s be on it. You’re not going to remember everything you’ve ever done to increase the value of your property. You fenced in the properties, you put in a swimming pool, you You know, you you did different things. You took a gravel driveway and now it’s an asphalt driveway. When you purchased it was gravel, now it’s asphalt. That increases the value of the home. So these are the kinds of things you need to document as well. Now, as long as you’re living and that’s what you’re doing as far as selling your property, that’s fine. Now, if you pass away and you leave that real estate. to um whoever your beneficiaries are, they’re going to get what’s called a step up in basis. But one of the things I’ve noticed lately is A number of clients, they inherit the property. 03:56 And keep in mind, it’s what the value of the property was at the time of inheritance, is what your value is. Not after you’ve put $50,000 into that home and increased the value by another $150,000. Because when mom was living in the house, for example, um, she was older, she wasn’t able to maintain the property the way it should be. A lot of things went bad or got old or even, you know, had holes in the floor and bad doors and all those things. And you said, hey, you know what, if we go through and we put a little money in this house, we could get a lot more money out. Great idea. But keep in mind, the value of the home was not the value after you improved it after the passing of that individual. The value that you get of the home was before that happened. So this is one of the big things the IRS has really come down on is a lot of times people are taking comps, but the problem is the IRS is finding that many of the homes when people have lived in them for 30 years have not been maintained like the other comps you’re pulling. So it’s very important to really start getting into appraisal so that the appraisal that comes in you can justify your basis, not just a comp. 05:14 Now, if there’s somebody that you know that can do a uh appraisal based on, you know, the roof is 30 years old, the house is fifty years old, uh, you know, all these different things that come into play because a lot of times people will say, well, I matched it up to another three-bedroom, five bath that’s sold right around the time of the passing And it’s roughly the same square footage. But was it built at the same time? Was it actually had the same kind of maintenance? Because again, as people get older, it is something that, you know, that the house can get away from them So, um, if you are an individual that is uh going to inherit or have inherited um a property It’s a great idea, don’t get me wrong, fix it up and then sell it and put the money, you know, double your investment, which many times can be done with some really decent improvements But um otherwise sell the property before you fix it up and then you don’t have to worry about capital gains. That’s your two options. But uh don’t fix it up and think that Al after you fix it up, now you get 100% tax write-off Because the tax law is coming back and saying, nope, we found out a lot of people are trying to do this. And so they are, you know watching and looking. 06:26 And again, when we file our taxes, it’s not like we want to sit there and say, what can we get away with? We want to file taxes that we can put to bed And that, especially if it’s a an estate tax return, because as a beneficiary or the executor especially, you have legal obligations to make sure the information is to the best of your ability correct But either way, you want to make sure that all of that information is being put together and that it’s being documented and that you’re able to submit that along with everything else to the beneficiaries so that they know how much money they’re going to end up being taxed because everyone always thinks all inheritance is zero, which a good chunk is, which is really nice. If you think about the step up and basis you get, that is about one of the best tax laws that’s on the books right now. Um versus, you know, like an IRA that you inherit and then you only have 10 years to basically empty it. Um, and that’s that’s not an easy thing to do. There are some games people will play, part of it going into charity, charitable remaining trust, different things like that where you can um donate a big chunk of it, but it doesn
