Technical article

Handing Items to Heirs Without Selling: Basis, Tax and the Paper

The value on the estate tax return also sets the basis, so one appraisal serves two purposes.

By Neil Solomon · 4 min read

Imagine a family where a father has died and left three things: a watch, a painting and a box of coins. There are three children. One takes the watch, one the painting, one the coins. Nothing is sold. Years later, one of them sells. What do they owe?

The answer starts with the value on the day of death. Here is how that works in four countries, from official sources.

The starting value, country by country

For Australia, one source adds that the heir takes the deceased's cost base for items acquired after that date and market value at death for earlier ones. Collectables stay collectables in the heir's hands.

The United States

The value on the estate tax return also sets the basis, so one appraisal serves two purposes. A consistent-basis rule requires the heir's basis to match the final estate tax value. Form 8971 tells each beneficiary the value.

IRS Publication 559 covers handing items over without a sale. The heir's basis is the estate's basis just before the handover, plus any gain the estate recognized, or minus any loss. A bequest of a named item is generally not a handover that triggers gain for the estate. The estate recognizes gain or loss only if the item is used to satisfy a bequest of a set dollar amount, or if an election under the tax code is made.

A later sale by the heir falls under the collectibles rate of up to 28% for items held more than a year. A 3.8% investment income tax can apply on top above set income levels. A lifetime gift is different: it keeps the donor's basis, so holding until death passes on a higher starting value.

The United Kingdom

A sale of an item for GBP 6,000 or less (approximately US$7,800) gives no chargeable gain. Above that, the gain is capped at five thirds of the excess over GBP 6,000. A loss on an item sold for less than GBP 6,000 is limited by treating the price as GBP 6,000. For 2026-27, capital gains tax is 18% within the basic-rate band and 24% above it, with an annual exempt amount of GBP 3,000. Watches that count as machinery under a 50-year test are exempt unless used in business.

Canada

Death is a deemed sale, and the gain is reported on the final return even if nothing is sold. For personal-use property, cost and sale price are each treated as at least CAD 1,000 (approximately US$720). An item bought and sold for CAD 1,000 or less leaves no gain or loss. Listed personal property, such as paintings, jewelry, rare books, stamps and coins, is reported on its own line.

The objection

You might say you were never going to sell, so none of this matters. It may not. The value still goes on a form now, and a child who sells in 2040 starts from it. Writing down the value and the date, and keeping the appraisal with the item, costs little today.

Doors you could open

You could ask each heir to keep the appraisal with the item. You could ask the executor whether the will names the item or a dollar amount, since that decides whether the estate recognizes gain. You could look at each heir's own country, since heirs living abroad face their own rules.

Selling an Inherited Home Abroad When the Heirs Live Somewhere Else covers the same starting value for a home when the heirs live in another country.

Has anyone in your family taken an item and sold it later? What did they wish they had kept in the folder? Share it here, and someone may find it useful.

Figures are estimates for planning, based on public data. Date read: October 2026.