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Selling Mother's House |
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Seven months ago, my elderly mother decided to transfer the title of her home to her five children. This was done so that her children would not have to go through probate in the event of her death. Due to the fact that my two brothers reside out of state, the title was quick deeded in my two sisters and my name. This was done in complete agreement among all five children. Unfortunately, our mother passed away on February of this year. Eventually, we plan to sell the home and divide the proceeds five ways. The home is only valued at around $85,000. This will be our only inheirtance. Will we need to pay a capital gains tax or inheirtance tax when we sell the house? If so, will the tax need to be paid by only the names listed on the title even if the proceeds are split five ways? What do you suggest? |
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It sounds as if your mother's estate is so small that there shouldn't be any estate tax. Your capital gain will be figured by subtracting your mother's cost basis from whatever you receive for the house. The cost basis is the amount your folks paid for the house, plus everything spent over the years on permanent improvements (new roof, furnace etc) and it probably changed when your father died, to a higher figure. You shouldn't have much in the way of capital gains tax, but it would be owed only by the three owners. I suppose the other two could reimburse you if you did have to pay something. |
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Edith
Originally published on March 25, 2008 |
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