Page 12 THE MALDEN ADVOCATE–Friday, December 2, 2022 For Advertising with Results, call The Advocate Newspapers at 617-387-2200 or Info@advocatenews.net Quaker Lane acquires $24.45MM Malden industrial property COST BASIS OF INHERITED PROPERTY T he cost basis of property acquired from a decedent is equal to the fair market value of such property at the time of the decedent’s death. This is pursuant to Internal Revenue Code (IRC) Section 1014(a) (1). This is referred to as the step up in cost basis. If real estate valued at $500,000 is devised pursuant to an individual’s Last Will and Testament or pursuant to the terms of a living Trust, the recipient of this real estate receives the benefi t of a cost basis equal to the $500,000. It's a new starting point. It’s as if the benefi ciary of the Will or Trust paid $500,000 for the real estate. If the real estate is sold shortly thereafter for $500,000, no capital gains tax will have to be paid. If the property were sold two years later for $600,000, the capital gain to be reported would only be $100,000. It is therefore very important to take into consideration the value of this step up in cost basis when creating an estate plan. Capital gains taxes can be as high as 23.8% federal and 5% Mass. With the new Millionaires tax in Massachusetts, some capital gains could be taxed at an additional 4% rate. Once taxable income exceeds $1,000,000, the excess income is taxed at a rate of 9%. The capital gain could actually push you over the $1,000,000 of income. Consequently, it is even more important to take advantage of the step up in cost basis in order to eliminate or minimize the actual capital gain itself. If appreciated real estate or stocks are simply given to your children outright, the cost basis in the hands of your children would be your cost basis. This is referred to as a carryover basis. You would look to what you originally paid for the real estate or stock, improvements to the real estate, depreciation taken if rental property, etc., in order to determine cost basis. Outright gifts like this do not make much sense in the vast majority of cases. It would be better to place the property in a living Trust in order to avoid probate, obtain the step up in cost basis, provide for estate tax savings and possibly protect against a nursing home if that is one of the objectives. Generally, the capital gains tax savings to the children upon a future sale of appreciated real estate or stock far outweighs the negative of having to pay a Massachusetts estate tax due to the real estate and stock being included in the decedent’s taxable estate. As an example, a $5,500,000 taxable estate consisting of appreciated real estate and stock would cost approximately $460,000 in Massachusetts estate taxes. If the original cost basis of the real estate was only $500,000 because the property was purchased 50 years ago and/or fully depreciated (if rental property), the capital gains tax savings would approximate $1.425million. The net savings to the children would be $965,000. There would be no federal estate tax as the current federal exemption is over $12million. Keep in mind that under IRC Section 1223(9), the holding period for assets received from a decedent shall be considered to be more than one year, even though the assets may have been sold by the beneficiary within one year from the date of death. Pursuant to IRC Section 1223(2), the holding period of the person making an outright gift plus the holding period of the recipient of the gift is added together in order to determine if a short-term (less than one year) or long-term (more than one year) capital gain would be recognized upon a subsequent sale. Joseph D. Cataldo is an estate planning/elder law attorney, Certifi ed Public Accountant, Certifi ed Financial Planner, AICPA Personal Financial Specialist and holds a master’s degree in taxation. B urgess Properties, LLC, one of Greater Boston’s premier suburban commercial brokerage fi rms, recently announced that it has brokered the sale of 180/184 Charles Street in Malden for $24,450,000. The +/64,300 SF building on +/-3.8 acres has been the longtime home of awning company Sunsetter Products – currently the asset’s sole tenant. The well-located property is situated one block from the Malden Orange Line T and Commuter Rail Stop and close to major highways. Boston-based Quaker Lane Capital, which has other assets in ~ LEGAL NOTICE ~ NOTICE OF FUNDING AVAILABILITY (NOFA) American Rescue Plan Act Funds Available for Vacant Property Acquisitions NOFA RELEASED: QUESTIONS DUE: ADDENDUM RELEASED: APPLICATIONS DUE: APPLICATION OPENING: NOVEMBER 9, 2022 AT 10:00 A.M. DECEMBER 1, 2022 AT 10:00 A.M. DECEMBER 1, 2022 AT 4:00 P.M. DECEMBER 12, 2022 AT 10:00 A.M. DECEMBER 12, 2022 AT 10:00 A.M. DELIVER SEALED APPLICATIONS TO: Malden Redevelopment Authority 215 Pleasant Street, Third Floor Malden, MA 02148 The City of Malden has received $45.7 million in American Rescue Plan Act (ARPA) Local Fiscal Recovery funds and has granted $2 million to the Malden Redevelopment Authority (MRA) to acquire, rehabilitate, and sell vacant properties as affordable homes to income-eligible households. The MRA is accepting applications from qualified applicants for the acquisition of vacant properties. Applicants must be owners of vacant property located in the city of Malden. Applications are available upon request. Applications are due on December 12, 2022 at 10:00 A.M. The City’s Office of Strategic Planning and Community Development (OSPCD) will review applications for accuracy and completion. OSPCD staff may request additional information after an application has been received. Please submit any application requests or questions in writing to OSPCD Housing Program Coordinator Kristina Tseng at ktseng@cityofmalden.org with “Vacant Properties Acquisition” in the subject line. Malden, acquired the property. Malden is seeing a signifi cant transformation in recent years, with many new developments underway, especially around its transit-oriented downtown. Steve Nohrden of Burgess Properties, Inc. was the sole broker in this transaction.
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