Rich Carreiro <rlcarr[at]animato.arlington.ma.us> writes:

- quote -

Errr... 15%, of course.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"mike" <MMAHAN[at]prodigy.net> wrote:

- quote -

All separate transactions, one does not affect any of the others.

- quote -

Which means you don't have a state income tax.

- quote -

Inherited capital assets are considered to be "long term",
and the current federal LT gain rate is 15% if you are in a
tax bracket above 15%. If it has been a short time since the
decedent died (and you inherited the house), it is likely
that the capital gains are small. Your "cost basis" was
stepped up to the date of death value.

- quote -

There is NO federal inheritance tax. and estate taxes were
paid by the executor of the estate. Even if there is a STATE
inheritance tax, it has nothing to do with any capital gains
tax on sale of the house.

- quote -

Pure urban legend.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"mike" <MMAHAN[at]prodigy.net> wrote:

- quote -

You will pay capital gains taxes on the sale of the
inherited home. However your gain will be based on the
profit in excess of the value at the date of death of the
person who left it to you. In other words, you may have
little or no actual taxable gain.

Stu

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"mike" <MMAHAN[at]prodigy.net> wrote:

- quote -

First things first. The inherited home. IF you *just*
inherited it, your basis in the home is the fair market
value on the date of death of the person who willed it to
you. Best way to find this out is talk to a realtor in that
area.

When you sell it for the same or less that the FMV, there is
no capital gains tax due on it. If it is more than the FMV,
you will pay tax on the difference. Meaning: Selling
price, minus cost of selling, minus FMV equals what you pay
capital gains tax on.

When you sell you primary home, (in which you have lived two
of the previous five years) you may keep $500,000 in any
profit without even reporting the sale.

Meaning: Selling price, minus cost of selling, minus basis (
what it you pais for it plus any major improvements) equals
what you pay capital gains tax on.

Missy Doyle

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"mike" <MMAHAN[at]prodigy.net> wrote:

- quote -

Please see a CPA before you do anything.

As a general rule your basis in a house you inherit is its
fair market value at the date of death for the prior owner.
So USUALLY you will have very little gain or loss if you
sell it shortly after you inherit it.

But remember free advice is worth no more than you pay for it.

Jo

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

Ask the estate administrator if there are any estate or
inheritance tax issues.

The inherited home comes with a basis equal to the Fair
Market Value as of the decedent's date of death. Your
capital gain or loss on the sale is long-term regardless of
how long you hold the property. (IRS Publications 550 and
551)

A gain on sale of your current residence may or maynot be
taxable. See IRS Publication 523.

- quote -

I don't see the big deal. Just pretend that the house was a
share of stock, read the pubs, and take a look at the 1040
Schedule D.

Phil Marti
Topeka, KS

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

mike wrote:

- quote -

A definitive answer only can come from an official IRS ruling.

If you inherit property you tax "cost" is the fair market
value on the date of death of the person you inherited it
from.

In most areas the value of property does not change rapidly
so if you sell it shortly after you inherit it you would not
have a gain on the sale of the property and therefor there
would not be any tax on the sale of the property.

Now the longer the lapse of time between the inheritance and
the sale of the property the greater the likelihood that the
market value at the date of death would not equal the
selling price.

A local Realtor in the area where the property is located
could give you a better guestimate of the market values.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

MMAHAN[at]prodigy.net (mike) posted:

- quote -

The inherited home will have a cost basis from the date of
inheritance. If you sell it, you will only owe taxes on the
difference between that basis and the sales proceeds.

- quote -

All wrong or confused. The simple facts are properly stated
above.

- quote -

You have just stated the _definitive answer: Using a
qualified professional.

However, I think you will find the inherited home facts as
clearly stated above: Your cost basis will be stepped-up to
the date of inheritance, so taxes will only be due on the
_gain from that basis.

For the second part of your plan (i.e., selling your current
home and buying a new one), you should take into
consideration that you will not owe taxes on any gain below
$500,000 - MFJ ($250,000 were you filing single) ... so long
as you have owned and lived in your current home for two
years.

Bill

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

Your basis in the home is the date of death value (unless
alternate valuation was used). What you sell it for is your
sales price. Sales price less costs of sale less basis is
your gain (or loss). If gain, it is taxable up to 15% of
the gain. If a loss, it may be deductible.

Helen, EA in PA
Member of The Tax Gang
Director, National Assoication of Enrolled Agents
Immediate Past President, PA Society of Enrolled Agents

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

mike wrote:

- quote -

In general, an inherited home gets a step up in basis
to the Fair Market Value at the date of death. If the
estate filed an estate tax return, you SHOULD be able
to find out that basis from the estate.

And long term capital gains (which sale of inherited
property IS, even if held less than a year) is now
taxed at only 15% of the gain.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"mike" <MMAHAN[at]prodigy.net> writes:

- quote -

Sorta correct. Your basis in the home is the fair market
value of the house on the day the person who formerly owned
it died. Your gain (or loss) on the house is calculated
relative to that basis.

So while you will indeed pay a 20% on your gain on the sale
of the inherited house, that gain will likely be small to
non-existent.

- quote -

See above.

- quote -

Not true.

- quote -

The definitive answer is that if this is a "simple"
inheritance (no complex trusts, etc. involved), your basis
in the property is the fair market value on the day the
bequeather died. And your holding period is (by law)
long-term, no matter how short you own the property before
selling it.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

this can't be a unique situation. however, i have tried a
bunch of keyword newsgroup searches and can't find anything
that fits this situation.

so here's what's happening.

my wife and i have just inherited a home that we are going
to sell. we have already found another house that we are
going to buy.

our plan is to sell the inherited house. buy the new home
and then sell our home (primary residence).

we live in florida.

so many people "know" that:

1. we will have to pay 20% capital gains on the inherited home OR

2. inheritance taxes have changed and we will not have to
pay 20% capital gains OR

3. you have only so much time to sell the inherited home and
if you don't THEN you have to pay capital gains OR

and so on.

my wife and i are looking for a (the) definitive answer. i
know we will ultimately go to a tax analyst or a financial
planner or a cpa. i know we need help on this so even if you
don't know the definitive answer, to whom do you suggest we
go for help with this question.

thanks,

mike and evelyn

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->