My brother & I inherited a condo that my mother owned when she died in 1989. Her husband continued to live there until approximately 3 yrs ago. We sold the property & it is in another state that neither of us live in.

I planned on using the money to purchase a new home in addition to the money I got from selling my home. I now am finding out that I should have done a 1031 with the money. It's too late for that. I also found out that I should have gotten a value on the home when we inherited it. Unfortunately I didn't do that either & put the propertiy in both my brother's & my name.

It's my understanding that I will need to pay approximately 25% of the amount that I received in taxes. Can someone please tell me what I need to do as I'm thinking I will need to pay approximately $20,000 and was planning on using this to pay against the condo my husband & I bought. We are in limbo as far as paying this money towards the loan because we're afraid we will need it for taxes. We're just trying to do the right thing.

Thanks in advance for your help

First, it is NOT as bad as you thnk.

Your first task is to determine the value of the condo at the time of your mother's death. A simple way is to review real estate ads from newspapers in the month of your mother's death and try to determine comparative value based on those ads. You can get the back issues of the local paper from microfiche records at any large public library. If you can identify three or more ads for similar condos (number of rooms, location, etc.), you can use the numerical average of the advertised sales price as your basis for the capital gains computation.

If the newspaper ads offer no similar condos for sale, contact a local real estate agent who was in business in 1989 and who bought and sold condos. They can probably provide you with the Fair Market Value (FMV) of the condo at the time of your mother's death by reviewing their sales records from 1989.

Since this will take some time and effort on their part, expect to pay a fee for this service. Since your brother will also need this information, he should share in paying this fee.

Once you have the 1989 FMV of the property, doing the basic computations to determine what is owed in taxes on the property will be relatively simple using tax software or asking for help from a local tax professional.

I can also do it for a small fee (see emall address below).