we sold a house and land that was inherited. our part was 15,000. what will the taxes be on it?

Question

we want to know what the taxes in texas on what inherited. for the irs.

Answer 1

Good news! The US Federal Government does NOT tax inheritance.

Now, when it comes to inherited homes, things get a bit different. If you never lived in the home, the home was never personal property to you. Therefore, you have to pay tax on any capital gain in the value of the house from when you inherited it to when it was sold. If it was sold in a relatively quick timeframe, chances are the house was NOT sold for more than it was worth when it was inherited. Finally, you get to deduct the expenses for the sale of the home as a capital loss.

An example will best explain all this mess:

10/1/2004: Uncle dies and leaves house to you. The fair market value (FMV) of the house on 10/1/04 is $200,000. Notice I don't mention what he paid for the house...this is irreverent.

10/2/2004 thru 4/22/2005: You spend $500 going to the house (airfare, gas, etc.) to fix it up to get it ready to sale. You buy $100 in paint. You pay $400 to a landscaper. The total here is $1000.

4/23/2005: The house is sold for $205,000. The realtor fees, inspection fees, and all other fees on the HUD form came to $6,000.

Your gain on the house is $205,000 - $200,000 - $1,000 - $6,000 or a grand total gain of minus $2,000. Yes, even though you got money for the home, you actually have a capital loss of $2,000 which you can write off on your taxes on Schedule D. This will save you $500 if you are in the 25% tax bracket.

Most people who inherit houses in which they do not live and sell it right away usually end up with a tax loss and end up with a lower tax bill. If you are unsure how to handle this on your tax return, please see a professional. Even if they charge you $150 to do your tax return, it is possible to save more than that if it is done right. When more than one person inherits the same property, divide everything appropriately among the inheritors.

I'm not an expert on Texas taxes. I do know that Texas does not tax income, and I believe they only tax estates, not inheritance. And, I heard that they stopped taxing estates in 2005. Please do your own research on Texas.

Hope this helps :)

Answer 2

Federal income tax due on the sale depends on the value of the property at the time you inherited it. The gain from that point until the sale is taxable.

Answer 3

Answer from Taxman is correct - except that a sale only 6 months after death would be the starting value for cost basis at death. An appraisal at death is overidden by a sale price in a "reasonable" time after death. The result is a loss caused by sales expenses.

Answer 4

Inheritance tax can go upto 50%, you should talk to your accountant.