My father recently passed away. He left my sister and I the house and farm land that our 93 year old grandmother lives in. The house and farm land was appraised at $73,500. There is a mortgage against the property still for $20,500. We are not in a financial position to keep the land and house or to buy the other one out.
According to my father's will we have to offer to sell it to one of his brothers or sisters no more than the appraisal value. In the event that they do not want the property then we cannot sell it until my grandmother passes away.
My aunt and uncle made an offer of $60,000. If my sister and I take the offer will we have to pay taxes on the money we receive ($39,500 after we pay the mortgage off)? I have never been through something like this and I need some advice.
2007-12-13 03:50:20 · 4 answers · asked by Megan H 1 in Business & Finance ➔ Taxes ➔ United States
Your basis in the property is the fair market value on the date of your father's passing. That would be the appraised value, assuming the appraisal is from a real estate firm and not from the property tax assessor.
If you sell for less than that amount, you would have a loss and no tax would be due. Since it is a personal loss, it cannot be deducted.
2007-12-13 04:15:28 · answer #1 · answered by taxreff 7 · 1⤊ 0⤋
You'd pay tax on the $60K minus the mortgage amount minus any allowable selling expenses minus what the house was worth when your dad passed away.
If at the time he passed away it was worth over $60K, which seems likely from your question, and you sell it for $60K, you wouldn't owe any income tax on the sale.
2007-12-13 12:14:43 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
as quickly as the sale closes the loan would be paid off. If something is left, it's going to be divided between the heirs. If there are no longer sufficient proceeds to pay off the loan (important, accrued interest, fees, etc.) then the lender eats the shortfall and no-one gets something. The executor of the valuables ought to grant an accounting of all aspects, expenses, etc. to all beneficiaries.
2016-11-26 19:50:26 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Not likely. It's inheritance and that amount is not enough to fall under the new inheritance tax laws.
2007-12-13 03:59:56 · answer #4 · answered by ed 7 · 0⤊ 3⤋