If you inherit a home the tax implications could appear complicated. A lot of people don’t know what to do. However, before you attempt to sell a home you’ve been given, ensure you know the answer to your most pressing tax-related questions.

  1. Does the Home Sale Tax Exclusion Apply to Inherited Property?

Normally when you decide to sell your house the tax law grants the buyer an exemption for the amount of $250,000 (or $500,000 for married couple who file jointly). This means that you don’t need to pay tax on the initial of $250,000 (or the equivalent of $500,000) of the profit you earn through the sale of the home. Looking to sell your house fast for cash? We beat the other guys’ offers read more

However, if you decide to decide to sell the property you have inherited and you aren’t eligible to be exempt from tax. To qualify you need to remain in the home over a minimum of two years making it your primary residence.

So , the simple answer is that you will not be eligible for the $250,000/$500,000 sale of your home tax exemption.

Here’s the good news. You’ll get the benefit of “stepped-up basis” rules for inheriting property. This means that you don’t require the exclusion at all.

  1. What Are the Stepped-Up Basis Rules for Inherited Property?

In normal circumstances under normal circumstances, in normal circumstances, the “basis” of a property is its the purchase price. In the case of inheritance property the “stepped-up basis” is the fair market value as of the time of the owner’s death.

It’s typically a higher figure that can help you. If you sell your property, your tax-deductible gain or loss will be determined by the fact that the selling price is greater or less than the basis that you stepped up to.

In the example above, if acquire a house with the appraised worth of $200 000 and you decide to sell it at a price higher than the appraised value then you’ll have an income tax-deductible gain. In the event that you decide to sell it at a lower amount, you’ll be able to claim an income loss

  1. If I decide to sell an inheritance home, can I deduct the Capital Loss from my Taxes?

When you acquire a home and then sell it at a price lower than its fair market value you can subtract the loss from your tax liability. This could significantly lower the burden of tax.

However, only $3,000 worth of losses can be deducted from your annual income. Additional losses have to be carried forward to future years.

Be aware that if you reside in the property prior to the time selling it will become your home and different tax laws apply.

  1. What’s the Fastest Way to Sell an Inherited House?

Selling a house you’ve been given can be very stressful experience. It’s a lengthy commitment to look through the entire house to make repairs, engage an agent, coordinate the showings and then negotiate offers.


By Admin

Leave a Reply

Your email address will not be published. Required fields are marked *