What Are The Tax Regulations When Selling An Inherited Property in Dallas Fort Worth TX?
Inheriting a home is a pretty sweet experience, yet bitter at the same time… It can be a lot of work at first, taking care of the paperwork, cleanup, fix-up, etc… You have a significant property value that you can use to better your life, but you are still grieving the loss of a loved one. So you may tend to ask yourself at this point “what are the tax consequences when selling an inherited property in Dallas Fort Worth?” The tax laws are there so that there will be no additional taxation when you inherit a property. This implies that the financial consequences are less daunting than what you would expect, which is good news for you. 🙂
Do you get taxed when selling inherited property?
You need to know first your basis in the property before you would know if it is taxable. Property inherited from a decedent is usually based on one of the following:
- The fair market value (FMV) of the property on the date of the decedent’s death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
- The FMV of the property on the alternate valuation date, but only if the estate executor files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.
An accuracy-related penalty may apply if an individual reporting the sale of certain inherited property for Federal estate tax purposes uses a basis in excess of the property’s final value, according to a new law established by Congress in 2015. Check What’s New – Estate and Gift Tax for the most up-to-date information on the new law’s final rules.
Tax-related details that you need to know when selling an inherited property
Calculation of basis
To understand how you’ll be taxed after inheriting a home, you must first understand how the basis is determined. Basis, in this case, refers to the asset cost for purpose of the calculation of capital gains along with other taxes. The market value of a deceased person’s property is increased to the market value at the time of death. For example, if a person purchased a home for $25,000 20 years ago but it was worth $100,000 at the time of their death, the property would be valued at the latter amount for capital gains purposes.
Taxation of gains/losses
Capital gains or losses are what you make from selling property for personal or investment purposes. Houses, furniture, and a variety of other items fall under this category. When you sell an inherited home in Dallas Fort Worth, the proceeds are taxed as a capital gain or loss. In most circumstances, you must have owned the property for at least a year in order to qualify for lower long-term capital gains rates.
Reporting the sale
When you sell an inherited home, you must report it to the IRS. You should first determine whether you have a capital gain or loss. How do determine whether it’s a capital gain or loss? By deducting the basis from the sale price. You must then report that amount to the appropriate authorities.
Having an inherited home can be stressful. You have new property to take care of and pay taxes for it at the same time. You should go through the probate process in Dallas Fort Worth as the first step to selling your home. The court will then authorize you to proceed as you wish. You should first reach an agreement with all other people involved in the inheritance, you can then file a petition requesting the court to allow you to sell the property.
Think about how much tax you will have to pay. To undertake a smooth and quick sale of your inherited house, call TMC Property Solutions now at (817) 550-5069 Opt#3. We are local trusted house buyers in Dallas Fort Worth, TX, and have been helping heirs sell inherited houses fast for 20+ years in North Texas. If you are still asking yourself what are the tax consequences when selling a house you inherited in Dallas Fort Worth, then we would be happy to discuss it with you in more detail.
If we can’t help you, we probably know someone that can, so give us a call today.
Selling an inherited house can relieve you of quite a burden. In addition to that, selling the property to an investor is a basic simple, and fast process. Contact us for inquiries on how to go about things when selling your house in Dallas Fort Worth and we will be glad to help you.
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