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Taxes on Sale |
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I enjoy your column every Saturday. My parents gave/sold me($1.00) their debt free house through a lawyer. The house is from the 1950's($18,000) in Rochester and now worth $100,000 and I reside there. If I sell the house, how much do I owe in taxes? If I should die now, without paying taxes yet, how much does the relative I leave it to, owe in taxes? Thank you. -Alex
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If you didn't live in the house, your cost basis would be the same as your parents'. You took that along with the gift. But because you live there, once you've owned and occupied the place for at least two years of the five years before selling, you can use the homesellers tax exclusion, which would more than cover your profit. No tax, federal or New York state.
As for inheritance: your heirs get a new "stepped-up" cost basis, value at the time of your death. If they sell for about that amount, no capital gains tax for them either. |
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Edith
Originally published on July 7, 2008 |
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