capital gains on inherited house?

Question

I inherited a house 20 years ago value $125,000. Today worth $600,000.+ My daughter has been living there for the cost of upkeep. I want to sell, can I reinvest moneys made without paying capital gains? If so how long do I have?

Answer 1

You can do a like-kind exchange, where you trade the property for another, and defer your gain until you sell the new property. The rules are complicated--you should talk to a CPA.

Answer 2

The only way you could reinvest the money without paying capital gains would be if it were investment property. Personal property is also subject to capital gain tax unless it is the sale of your main home and you have lived in the home for two out of the five years you've owned it.

Answer 3

To avoid taxes, you'll have to move into the house yourself for at least 2 years. After that you can sell it and exclude up to 500,000 in gain from income. Anything above that will be treated as long term capital gains, currently taxed at 15%. Keep in mind that the rules can change at the whim of Congress.

If you sell it now at 600,000 your tax bite will be 71,250.

Answer 4

It would have to have been your primary residence for 2 of the last five years and you could not have already sold a primary residence in the last two years. Then you could sell it and buy a new house that was worth the same or more and defer the gain.

Answer 5

Responses without sources aren't answers, just opinions.

Chapter 1 of IRS Publication 544 discusses like exchanges. See the link for additional details.

Answer 6

No, you have to live there for 12 months before selling.

If you do you pay no taxes on the sale.

If you don't you will pay 15% on the gain.

Answer 7

Yes yo can after two years a SINGLE person can not pay captial gains up to 250,000 a couple can do it up to 500,000.