[snow19599]

I live in Idaho but acquired some property in Pennsylvania from my late grandmother. The property was sold and divided between 4 siblings. My question is do I have to pay taxes on my portion of the money I earned from the sale.


Thank You

[AtlantaTaxExpert]

Depends on how much money is involved. There are exemption amounts that vary from state to state.

If it is less than $100,000, I suspect NO state inheritance taxes are due. Contact BOTh the Pennsylvania and Idaho tax authorities to be sure.

NO income taxes (state or federal) are due.

[Mobea]

ATE may be right about not having to pay state taxes at the time of inheritance. Was there a declared value put on the property at the time of the inheritance? How long after you inherited it did you sell it? For federal tax purposes you only pay capital gain tax on the profit between the inherited value of the property at the time of the inheritance and the price that you sold the property for.

[AtlantaTaxExpert]

Mobea makes a good point. I forgot about potential capital gains.

However, the costs of the sale are added to the stepped-up basis, which makes the possibility of there being any capital gains remote. In fact, there MAY be a loss (which IS tax deductible against other income).

[Mobea]

I respectfully disagree. Personal property losses are NOT deductible. Unless it is a casualty loss, then it is reported on Schedule A.

[AtlantaTaxExpert]

The house was never lived in. You can make the argument that it was an investment property.

Does not really matter. The amounts involved are so small as to be insignificant.

[Mobea]

In order for it to be considered investment property, wouldn't the property have to be purchased from the estate with the intent of producing income or capital gain? Also, each investor would retain the right to sell or retain their share individually? I thought the IRS was clear about inherited property. Am I confused on this?

[AtlantaTaxExpert]

It is impossible to determine intent on purchase, because the property was inherited.

However, if the heirs rented the property, or began to do repairs and/or improvements with the intent to rent the property, then they have established that the property is investment property.