Inheriting a home is a pretty sweet experience, yet can be sorrowful at the same time… You’re left with great property value you can use to improve your life, and yet you’re still mourning the loss of a loved one or friend. So you may find yourself asking “what are the tax consequences when selling a house I inherited in Dallas / Fort Worth TX?” The tax laws have been designed in a way to not add any more burden on you upon inheriting the property. This implies that the financial consequences are less daunting than what you might expect, which is good news for you. 🙂 So if you’re wondering what are the tax consequences when selling a house I inherited…keep reading on…
Tax Consequences when selling a house I inherited in Dallas / Fort Worth, TX
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a home, you need to know how the basis is calculated. Basis, in this case, refers to the asset cost for purpose of the calculation of capital gains along with other taxes. When a person dies, the value or basis of their property in Dallas / Fort Worth is increased to the market value as it was at the time of their death. For instance, if a person purchased a home 20 years ago for $25,000, but it was worth $100,000 at the time of their death, that property would be valued at the amount of $100,000 for the purpose of calculating capital gains.
So are there tax consequences of selling a house that I inherited? The short answer is yes! Here’s a few more things you should know.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. Such can be houses, furniture and many more things. If you decide to sell an inherited home in Dallas / Fort Worth, that sale is regarded as capital gain or loss for the purpose of income tax. In most cases, in order for you to qualify for lower rates of long-term capital gains, you are required to have held onto that property for at least one year. However long the duration you have been in ownership of an inherited home, any gain or loss will still be treated as long-term. I know…it sounds complicated, and it is. But keep reading if you’re still wanting to know more about tax consequences when selling a house I inherited…
Reporting the sale
Upon selling a house or property that you’ve inherited, you have to report it to the IRS for the income tax purposes. You should first calculate your capital gain or loss. This is done by subtracting the basis from the actual sale amount. You should then report that amount to the necessary authorities.
If you haven’t figured this out yet, having an inherited home can be stressful given the fact that you have a new property to take care of and you’re now responsible for paying taxes on it at the same time… And not to mention, if the home is in disarray and needs repairs, you’re now the one responsible for all that as well.
The first step you should go through is the the probate process in Dallas / Fort Worth when you inherit a home. The court will then authorize you to proceed as you wish. If there are any other individuals involved in the inheritance (for example other siblings or relatives, etc), it will help tremendously if all of you can come to an agreement of how to proceed from there. You can then file a petition requesting the court to allow you to sell the property.
Another important step then is to consider how much money you’re going to owe in taxes. This will be paid against the capital gains or losses resulting from the sale of the house. It’s recommended that you talk with a tax professional as you’re figuring out your tax liabilities when understanding tax consequences when selling a home I inherited.
You can also call Madison Lea Homes now at 972-945-7299 if you want to sell your inherited home in a smooth and legitimate way. We are local here in Dallas / Fort Worth TX, and we know the market here better than anyone else. If you’re still asking yourself what are the tax consequences when selling a house I inherited in Dallas / Fort Worth, then we would be happy to discuss it with you in more detail. We’ve worked with many others in a situation just like yours, and we can certainly help guide you to the right people if you’re not sure how to seek the right help!
We buy inherited houses and properties often, and we can close in a time frame that works best for you. We buy homes in any condition, and won’t request any repairs at all. And, we’ll pay for all the closing costs associated with the sale of the property.
Selling an inherited house can relieve you of quite a burden. In addition to that, selling the property to an investor like us can be a simple and fast process. Contact us for a cash offer and we can help walk you through what you need to know when selling your home in Dallas / Fort Worth. And we’re always glad to help you.