Mike Lewis wrote:

- quote -

Is it automatically community property if held by spouses in
Texas? In California it's not. If the deed says "joint
tenancy" (which title companies have been doing pretty much
automatically whenever a couple buys a house), it may not be
community property for this purpose.

Stu

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"Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote:
- quote -

Well, I can plead typo on the form number. However, I forgot
to mention that non-community states is half stepup plus
half basis. Living in TX, I guess we kind of have tunnel
vision:-)

Mike Lewis, CPA

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Mike Lewis wrote:

- quote -

706? I thought only programers made off-by-one errors!

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Rich Carreiro wrote:
- quote -

A small technical point: It's not just whether you live in a
community property state. The ownership of the property
must be recognized by the state as being held as community
property. Many married individuals in a CP state have opted
not to hold jointly owned property as community property.

--
Alan
http://taxtopics.net

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Rich Carreiro wrote:
- quote -

If it was legally community property. I've seen (or at
least heard of) the IRS come in and determine that property
titled as joint tenants was not community property and was
not entitled to full stepped up basis.

Stu

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"Bevd" <bevd323[at]peoplepc.com> wrote:

- quote -

Assuming your spouse's death occured in the last few years,
the step up in basis is available to you on the entire
house. The basis should be stepped up to the value assigned
by the estate executor on form 705. If the estate was too
small to require this, you need to use a reasonable method
to determine its fair market value on your spouses date of
death. This will be its basis. Prior costs, improvements,
etc are not involved.

Mike Lewis, CPA

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"Bevd" <bevd323[at]peoplepc.com> wrote:

- quote -

None of the above.

It depends on the state you live in, as the rules are different for
"community property" states and non-CP states. Community Property
states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico,
Texas, Washington and Wisconsin.

In a CP state, your cost basis is "stepped up" to the FMV on date of
death. Add to that any capital improvements you made after that date.
If the death occurred relatively recently, there may be insufficient
gain to even worry about capital gain taxes.

In a non-CP state, your cost basis consists of 50% of the FMV at date
of death, plus 50% of the original purchase price, plus 50% of
improvements prior to death and 100% of improvements after death.

In either case, you may or may not have a taxable sale. If you OWNED
and LIVED IN the house as your principal residence for a minimum of 2
of the 5 years prior to sale, you can EXCLUDE tax on gain of up to
$250,000. No reporting on your tax return, either.

If the sale occurred in the year of death of your spouse, and you file
Married Filing Joint, you can exclude up to $500,000 of gain.

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- quote -

I am sorry to hear of your loss. Your basis is 1/2 of the original cost, plus
1/2 of all improvements placed into the home prior to your husbanmd's death,
1/2 of the assessed value as of the date of death of your husband, and 100% of
any improvements that you put into the house after his death.

I hope that helps

Bruce Raskin, CPA
Small Business and Individual Tax and Accounting Services

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"Bevd" <bevd323[at]peoplepc.com> writes:

- quote -

If you live in a community property state, your basis is the
fair market value of the house on the day your husband died.

If you don't live in a CP state,
your basis = one-half of FMV on day of death + one-half
of what basis of entire house was just before he died

And "basis of entire house just before he died" would be
your purchase price (including non-deductible settlement
charges like recording fees) plus any improvements made over
the years.

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

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Bevd wrote:

- quote -

Depends on which state you're in. If you are in a community
property state, and the house might be considered to have
been community property, your basis is the value at your
husband's date of death.

If not community property, your basis is half the original
price paid plus half the appraised value at the date of
death, along with other adjustments that may have been
available over the years for capital improvements, if you
ever rented the place out for more than two weeks in any
year, etc.

Stu

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I've sold my home and would like to know my tax basis. I'm a
widow, owned the home jointly with my husband, it was in the
will that I recieve the house. I'm familiar with cost basis
on assets, but I'd like to confirm this situation. Would my
basis be the price we paid originally, or the appraisal
value at the time of his death? Would I take half the
appraisal value as my basis, or all of it. Would half the
improvements we made add to my basis, or all of them?
Thanks.

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