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Mother Owes More Taxes |
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Dear Edith: My mother inherited her father's house. She rented it out for eight years and sold it a short while ago. At the time of the sale she was 70 years old. She paid a transfer tax and was told she still owes a lot of income tax. Does she really have to pay income tax? The house was left to her in a will and she has already paid inheritance tax and transfer tax. Some people say no income tax because she sold it at age 70. A friend of hers also was left a house and sold it right away and did not pay IRS taxes. Their lawyer said it was because they inherited it |
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If your mother had sold that house soon after her father died, there would have been little or no taxable profit, because it would have been worth about the same amount it was when she inherited it. But if the value went up in the eight years she owned it, she does have taxable profit. And her profit is increased by the amounts she's deducted for depreciation while she was renting it out. The fact that she's in her 70s has nothing to do with the tax situation. The special tax breaks you're thinking of apply only to the sale of one's own main residence, and these days age doesn't matter for that anyhow. |
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Edith
Originally published on July 10, 2005 |
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