Taxation of sale of inherited property?

Question

I need some legal advice on taxation of the sale of inherited real estate in Connecticut. Is it more efficient to leave the title in the estate or transfer the deed and title of the property to the executor or heir? Is sale of inherited property treated as capital gain if so what is the basis.

Answer 1

If the person who would inherit the real estate wants to keep it, then it would be better to transfer the deed to the heir. If they don't want to keep it, then may as well live the title in the estate, and have the estate sell it and distribute the proceed to the heir(s). Sale of inherited property is treated as capital gain, as long as the sale price is more than the cost basis. The cost basis is what the property was worth on the day the deceased person died. There is also an alternate date that can be used to value the real estate, which is 6 months after the deceased died. The only problem with using that is that you have to use alternate valuation for all the assets, not just some for alternate and others for using date of death. Inherited property is also treated as long-term capital gain, even if the property is sold 1 second after the person inherits the property. Long-term capital gain is taxed at maximum of 15% rate (5% for those in the 10 or 15% bracket).

Answer 2

the basis for inherited property is the value on the date of death of the deceased, or on the optional valuation date which is exactly six months later.

Capital gains tax applies only to the extent the net proceeds exceed the basis.


It is simper to sell it out of the estate. You'll need to alert the closing agent in advance to make sure the correct paperwork is prepared to prove that the Executor has the power to sell the property for the estate.


GL

Answer 3

Indexation will not be a compatible alternative if the estate has been a latest acquire and the rate has long past up excess of the index desk. You might uncover it inexpensive/greater to pay tax straight at the earnings. Remember, any investments you are making might grow to be locking your finances over elevated durations of time, perhaps even seven years at abysmally low curiosity premiums - shrink than the inflation price routinely and consequently in truly phrases you may also endure capital erosion. The curiosity supplied through so much capital earnings bonds even though low, is taxable. Study the choices after which take a decision. You might uncover it lucrative making an investment in a well mutual fund after paying taxes, your returns might be be bigger, even though mutual fund or any fairness and debt comparable investments are area to marketplace dangers. For extra main points do get in contact with me, perhaps I can aid.