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How do I figure how much tax will be due for the sale of a home I inherited?
My mother died 1/24/09. I am executor of her will. We did a transfer on death deed before she passed because her home was the only thing she owned. Her wishes were to sell the home, pay her expenses and divide the rest equally btwn my 3 brothers and I. I am selling the house in a few weeks. How do I figure out how much tax $ to hold back from each of us to pay the taxes on the sale of the home. The home was paid off when I got it. I have paid all utilities and expenses until the sale of the home. Thanks.
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Please clarify - I assume the transfer on death deed gave ownership in equal shares to all 4 of you as joint tenants, right? If so, the only taxes to be concerned about are the capital gains (if any) on the home? Since there are 4 of you who each inherited 1/4 of the house, each of you has a cost basis equal to 1/4 of the fair market value as of her date of death. You will each owe long term capital gains tax on the difference between 1/4 of the total proceeds you get for the sale (sales price minus commissions and fees) and the cost basis. If this turns out to be a loss, you can not deduct it. Since each of the 4 heirs will owe this tax as part of his 2010 income tax return, there is no reason for you to "hold back" this money from your brothers. By the way, I am assuming here that there are no estate taxes due on your mother's estate - please correct me if I am wrong. |
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