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    joeblow00's Avatar
    joeblow00 Posts: 4, Reputation: 1
    New Member
     
    #1

    May 20, 2018, 05:35 AM
    Taxes
    Hi.my wife's father passed away and she inherited his house in lockport ny and plans on selling it.its worth about $70000.my question is does she have to have to pay any taxes on it?thanks
    ebaines's Avatar
    ebaines Posts: 12,130, Reputation: 1307
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    #2

    May 20, 2018, 10:33 AM
    Probably not. Upon inheriting the house its cost basis is automatically stepped up to the market value as of the data of death of the decedant. If after selling the house she nets more after expenses of selling than that cost basis, then she will have to report the difference as a capital gain (I'm assuming that the house has NOT been her principal place of residence for at least two of the past 5 years). But if she is quickly "flipping" the property upon inheriting it, then it's highly likely that the cost of selling it (such as sales commission, cost of any remediations that must be done in order to sell it, any real estate transfer taxes she may have to pay, etc) will make the sale a net loss, and hence no taxes would be due.

    Please note I have not broached the subject of any estate or inheritance taxes that may be owed by the estate or by your wife, respectively. Most states do not have inheritance taxes, but a few do, and the rules vary by state.
    ma0641's Avatar
    ma0641 Posts: 15,681, Reputation: 1012
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    #3

    May 20, 2018, 03:24 PM
    Concise answer from ebaines. I would also have a real estate broker get you a fair market value in writing. IRS won't take what it's "worth about".
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,753, Reputation: 846
    Senior Tax Expert
     
    #4

    May 20, 2018, 10:41 PM
    All what ebaoines has said is true.

    My two cents is that the sale of the house MAY have to be reported NOT on your mother's return, but rather on a fiduciary return filed by the estate executor. The proceeds are then issued to the heir (your mother).
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,753, Reputation: 846
    Senior Tax Expert
     
    #5

    May 20, 2018, 10:54 PM
    All what ebaoines has said is true.

    My two cents is that the sale of the house MAY have to be reported NOT on your mother's return, but rather on a fiduciary return filed by the estate executor. The proceeds are then issued to the heir (your mother).

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