Income tax on inherited property

Dear 1031x: We are selling a house in, South Carolina that was owned  by my husbands deceased mother who has paid the property off.  The sales  price of the house is $135,000 and the real estate fees and title fees  will be about $10,000 there for they will net aprox. $125,000.  Will there  be a Capitol Gains  Tax on the money they will receive?

Dear K:  Tax liability is paid on the gain.  The gain is determined by subtracting the basis from the net sales price.  When a property is received by inheritance the tax basis for the new owner is reset to the fair market value of the property on the date of death.  If your husband received the property by inheritance (and not by gift during his Mother's life) then he will have received a new tax basis in the property equal to its fair market value date of death.   The gain will be primarily, the appreciation in the property since Mom's death.  For example: FMV date of death is $100K; now property sells (net) for $125K.  Tax will be due on $25K.  Tax rate is 15% to federal government plus any income tax imposed by the State(s).  I hope this helps.  I also hope you will choose us for any 1031x that you need.  Sincerely,

Steve Hickox
Attorney / President

1031x.com has grown to provide many services to our clients as Castle United!
Click here:  http://www.CastleUnited.com/

1031x.com, Inc.
2120 S. Birch St.
Denver, CO 80222
303.504.0144
Toll Free 888.899.1031
Fax 303.715.1012

infox@1031xcastle.com