Taxes on Selling Inherited Property (Howe: mortgage, lawyer, house)

[Aceraceae]

Excuse my ignorance.

What is the typical tax percentage or amount from selling an inherited property? Not capital gains. There will be no mortgage to pay off so after all the realtor fees and closing costs are paid, what taxes remain?

Just for example, if after realtor and closing I had 10,000 left. Does that just get included in our income tax?

[cordata]

You may want to consult a lawyer or accountant. However the taxes in question would be capital gains taxes. In general when you inherit something you have a cost basis of the value of the item at the time of inheritance. So if you inherit a house worth $200,000 and then sell it for $200,000 you would owe now taxes. If you sell if for $250,000 then you would owe capital gains on $50K.

The $10K left you mention could be a gain, a loss, or a break even it all depends.

[Aceraceae]

Originally Posted by cordata

You may want to consult a lawyer or accountant. However the taxes in question would be capital gains taxes. In general when you inherit something you have a cost basis of the value of the item at the time of inheritance. So if you inherit a house worth $200,000 and then sell it for $200,000 you would owe now taxes. If you sell if for $250,000 then you would owe capital gains on $50K.

The $10K left you mention could be a gain, a loss, or a break even it all depends.

Thanks. I'm definitely going to talk to professionals.

[synchronicity]

Originally Posted by Aceraceae

Excuse my ignorance.

What is the typical tax percentage or amount from selling an inherited property? Not capital gains. There will be no mortgage to pay off so after all the realtor fees and closing costs are paid, what taxes remain?

Just for example, if after realtor and closing I had 10,000 left. Does that just get included in our income tax?

In general, when you inherit property you get a "step-up in basis" to the property's value at the death of the decedent. Which means that if you sell such property shortly after inheriting it, the capital gains should be minimal and there should be very little income tax liability attributable to the sale.

There are some exceptions to this depending on how you inherited the property - if you received it as a distribution from a certain type of trust, it may have been excluded from the "taxable estate" and therefore it would not receive a step-up in basis. But in most "normal" situations, you inherit property, you take it with a basis equal to FMV at date of death.

Apparently I no longer need to give Circular 230 Disclaimers, but I'll state that you should consult with your own attorney and not take the advice of some random peep on the intermaweb, even if they sound like they know what they're talking about because they could just be some teenage kid living in his parents' basement or something.

ETA- looks like cordata already told you that, more concisely!