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How much tax do I pay on sale of a house?
Three brothers over age 65 sold a house that was inherited.One brother lived in the house till time of sale. Monies from the sale was divided equally between brothers. How much tax if any is due to IRS from one of the brothers who lives in the state of Texas?
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That depends entirely on the amount of the sale of the house and if they have sold a home in the last 3 years. According to the IRS a person can not claim the amount of the sale of a home if they have not sold a home in the last 3 years and the sale price is less the $250,000 for single and $500,000 for married persons.
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Assuming that each of the each of the brothers owned an equal share of the property in accordance with the mother's will, then each has a cost basis equal to 1/3 of the fair market value of the home at the time of the mother's death. They split the proceeds equally, so each reports his share of the proceeds and cost basis to figure their capital gain on Schedule D. The brother who was living in the house may be able to claim an exemption if it was his primary residence for at least two of the previous five years, but the others cannot. Assuming you have a gain (not a loss) the tax due will depend on the amount of the gain and the capital gains tax rate, which in turn depends on your adjusted gross income.
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