Hey everybody, My father died about two years ago. He didn't have much of anything but we inherited his house which we just sold this house last month. After our expenses (painting the house, real estate fees, power bills) we will each get $10k.
How do taxes on this work? I would think that we'll have to report the money on our 2007 taxes but I want to make sure.
Thanks for your help,
Jim
2007-04-23 15:41:42 · 3 answers · asked by Satellite Guy 3 in Business & Finance ➔ Taxes ➔ United States
When you inherited the house, you received the stepped-up basis on the date of his death. You will have to pay tax on any gain above that stepped up basis, unless you lived in the home as your principal residence for 2 of the 5 years immediately prior to the sale.
The gain will be taxed as a long term capital gain at a lower rate normally 15% for most taxpayers.
2007-04-23 16:48:23 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
The amount is 2 million this year so you will probably be okay on the estate tax and you can either take the FMV at the time of Death or the Sale Price within 6 months so if you sold it within 6 months you wont have to recognize anything.
2007-04-26 20:21:46 · answer #2 · answered by BMAC 2 · 0⤊ 0⤋
Your fathers total estate value must exceed $650,000 with the life insurance policy included before the U.S. government will want money. Don't know about your state laws I dealt with it in Illinois but I would say it's yours to do as you wish and NOT considered as earned income. That is if the house is all you got.
2007-04-23 15:54:28 · answer #3 · answered by Him Roy Dull 2 · 0⤊ 2⤋