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jbrown65 · Aug 8, 2008, 09:12 AM

My mom inherited a house from her parents and is selling it as the owner. Does she have to pay taxes?

progunr · Aug 8, 2008, 09:13 AM

Only if she is still the owner when the taxes come due.

jbrown65 · Aug 8, 2008, 10:01 AM

Originally Posted by jbrown65

My mom inherited a house from her parents and is selling it as the owner. Does she have to pay taxes?

I'm sorry I should have said my mom and her siblings (5 total). If the taxes are due in Dec and the house sells in Sept , than they don't pay taxes (correct).

twinkiedooter · Aug 8, 2008, 10:08 AM

She should check with the county tax auditor's office and see if there is any tax owed on the home should it be sold in Sept.

ebaines · Aug 8, 2008, 12:16 PM

As far as real estate taxes are concerned, normally the tax bill is pro-rated so that the buyer and seller each pays for the portion of time they owned the house. At the closing one party reimburses the other for the portion of time during the quarter that they owned the house. For example, if you sell on October 31, and the next tax bill is due Dec 31, you would pay for the 31 days of October and the buyer would pay for November and December. Whoever manages the closing where you live (title company in some states, seller's attorney in others) figures the details.

The other tax that may be due are capital gain taxes. The cost basis for the house is the market value on the date that your mother inherited the property. So if she sells it for more than that there may be capital gains taxes due, unless she qualifies for an exemption (i.e, if she lived in the house as her principal residence for at least two of the previous 5 years she can exempt up to $250K of the gain). However, it sounds as if the house is currently jointly owned by 6 people, and consequently each will have to report his/her portion of the gain on their taxes.

ScottGem · Aug 8, 2008, 12:22 PM

There are several taxes involved here. There are property taxes, Capital Gains taxes, mortgage recording taxes and several more. All but the Capital Gains tax should be taken care of at the closing. The attorney or title company rep will take care of this.

Each of the siblings will then need to file a form listing the sale with their income taxes. They will need to use the value of the property at the time they inherited it as the cost basis to determine the amount of gain (or loss).