Key Takeaways
- A Ferrari Daytona SP3 sold for $18.54 million at an Oct. 31 auction in Las Vegas, and its window sticker was $2.33 million.
- A hypothetical collector who bought one new at that sticker price and sold it for $18.54 million would have a $16.2 million long-term gain and would owe $3.86 million in federal tax on it at 2026’s top rates.
- An heir who inherited the same car would use its value on the day of death as cost basis, so a sale at $18.54 million shows $0 of gain.
- The same step-up covers inherited shares and homes, so a retiree sitting on a big winner faces very different tax bills depending on whether they sell it or leave it to heirs.
If you own something that’s soared in value, here’s a tax rule worth knowing: once it passes to your heirs, the gain you built up can drop out of the tax math entirely.
And a green Ferrari that just sold in Las Vegas shows how much that can be worth.
Not a bad return on a car
A Ferrari Daytona SP3 sold for $18.54 million at Broad Arrow’s Las Vegas auction on Oct. 31. It was built in October 2024, shows just 81 miles, and its window sticker reads $2,334,048. Hagerty’s price guide had a best-in-the-world SP3 at $16 million, and Hagerty says it’ll raise that value after this sale.
So let’s take a hypothetical collector who bought an SP3 new for that same $2,334,048 and sold it for $18.54 million. That’s a $16,205,952 gain, which is wonderful news right up until tax time. But if the collector had held the car until death, and an heir then sold it for $18.54 million, the heir would report $0 of gain.
The heir gets a fresh cost basis
An heir’s cost basis in inherited property is generally its fair market value on the day the owner died. That’s the step-up in basis, and since the heir’s cost starts at that value, the gain built up during the collector’s lifetime isn’t taxed when the heir sells. Say the car was worth $18.54 million on the day the collector died. That becomes the heir’s basis, so a sale at $18.54 million shows $0 of gain.
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The collector’s bill: $3.86 million
The collector who sells has a very different year. In 2026, long-term gains are taxed at 20% once taxable income passes $545,500 for a single filer, or $613,700 on a joint return. The 3.8% net investment income tax comes on top, on the lesser of investment income or modified AGI over $200,000 for a single filer ($250,000 joint). Say the collector’s other income already clears all of those lines, so every dollar of the gain is taxed at the top rates.
That’s 20% of $16,205,952, or $3,241,190.40, plus 3.8%, or $615,826.18, for a federal bill of $3,857,016.58 on the car. (If the car counted as a collectible, like coins or art, the top rate on the gain would be 28%, and the bill bigger still.) The heir who sells at the same price owes nothing on the gain. So the heir walks away with $3,857,016.58 more than the collector would have, between the 20% rate and the 3.8% tax.
You don’t need a Ferrari for this
Few of us will ever own an $18 million car, but the same rule covers inherited shares, a home or a painting. A retiree holding stock bought decades ago faces the same choice on a smaller scale: sell it to pay for retirement and pay tax on the gain, or hold it and let the heir’s basis reset to its value on the day of death. The stakes are smaller for more modest incomes, since a single filer’s gains are taxed at 0% up to $49,450 of taxable income in 2026 ($98,900 joint) and at 15% up to the 20% line.
So when a retiree needs cash, it pays to know which assets carry the big gains before deciding what to sell. Spending from cash, or from holdings that haven’t gained much, keeps the big winners in place for the step-up. Of course, that only works if you can afford to hold, and money left to heirs is money you don’t get to spend. And the step-up is an income tax rule: whether an estate owes estate tax is its own calculation.
The way I see it, few lines in the tax code are worth more to a retiree with a big winner and no need to sell it. Just remember that the heir’s basis is the value on the day of death, whatever that turns out to be. Hagerty’s Andrew Newton is already wondering “how sustainable this trend is” for Ferrari prices, and an heir who holds on and later sells for more than that day’s value will report the gain above it.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
