Tax consequences of selling deceased parent's house
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You have to get an appraisal that establishes what the value was back when it transferred to you. I went through this a few years back with my parents estate. The appraiser looked at old sale values to establish what the fair value would have been at the time of transfer. This becomes your basis for gain or loss.
To me, the $20K is not a significant amount in the construction/renovation business and could have easily been a required expenditure for the 1961 vintage house to meet current Building Code Requirements in order to be sold.
Having a pre-renovation appraisal done would have been to the letter of the Tax Code, but you didn't. So now you can try to determine an appropriate post-dated pre-work appraisal. Or you can go rogue and assume any value increase associated with the minor renovation work never happened, which may or may not be true. Or you can consider the $20K an Interest Free loan to the Estate to prepare the home for sale by updating to meet Code Requirements.
It will be interesting to see what your Tax Accountant advises you to do.
To me, the $20K is not a significant amount in the construction/renovation business and could have easily been a required expenditure for the 1961 vintage house to meet current Building Code Requirements in order to be sold.
Having a pre-renovation appraisal done would have been to the letter of the Tax Code, but you didn't. So now you can try to determine an appropriate post-dated pre-work appraisal. Or you can go rogue and assume any value increase associated with the minor renovation work never happened, which may or may not be true. Or you can consider the $20K an Interest Free loan to the Estate to prepare the home for sale by updating to meet Code Requirements.
It will be interesting to see what your Tax Accountant advises you to do.
Any taxes that may resulted from this inheritance were likely paid five years ago when they were due.
Any taxes that may resulted from this inheritance were likely paid five years ago when they were due.
Great! I didn't notice the original posting date before replying. Why do people dredge up these old posts without alerting others they are re-opening an old situation?
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