Tax consequences when selling a house inherited in Poughkeepsie, New York
The tax laws are designed so that inheriting a property does not add more burden to you. The financial consequences are usually less daunting than people expect, which is good news.
Hudson Home Rescuers buys houses in cash, as-is, without the seller needing to make any repairs. We are a good fit if you need to sell fast, or if you do not want to deal with agents and agent fees. Our purchasing process is transparent and fair, so get in touch with any questions.
Calculation of basis
Assume the property has gone through probate successfully. To understand how you will be taxed on an inherited home, you need to know how the basis is calculated. Basis here refers to the asset cost used to calculate capital gains, among other taxes.
When a person dies, the basis of their property is stepped up to the market value at the time of their death. For instance, if someone purchased a home 20 years ago for $25,000 but it was worth $100,000 when they died, the property is valued at the latter amount for the purpose of calculating capital gains.
Taxation of gains and losses on an inherited house
Capital gain or loss refers to what you earn from selling a property held for personal or investment purposes. If you sell an inherited house, that sale is treated as a capital gain or loss for income tax purposes. Normally you must hold a property for at least a year to qualify for the lower long-term capital gains rates.
However long you have owned an inherited home, any gain or loss is still treated as long-term.
Reporting the sale
When you sell an inherited home you have to report it for income tax purposes. Calculate your capital gain or loss by subtracting the basis from the sale amount, then report that figure.
Go through probate first. The court will then authorize you to proceed. If other people are involved in the inheritance, agree the decision with them, then file a petition asking the court to allow the sale.
We are local Hudson Valley home buyers
Selling an inherited house can lift a real burden, and selling to an investor is a simple, fast process. We are local, we buy houses here in Poughkeepsie, and we know this market. If you are asking what the tax consequences are for a house you inherited, we are happy to talk it through.
This article is general information, not tax advice. Talk to your accountant or attorney about your own situation.