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Real Estate And IRS Question
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Posted by thirdfrt (My Page) on Mon, Jan 18, 10 at 21:15
| Hi to all,
I will try to break this down so it will be easier to understand.
We inherited a house which we sold in July of 2009.
There are no inheritance taxes in the state where I live.
Had the house Appraised after mothers death so the Basis would be
House worth: $72,500.00 at time of death June 2008.
House sold for: $65,000.00 in July 2009.
Realtor received her fee:
Paid $3,000.00 in closing costs
Title company received their fee
My understanding is that we can claim a loss on the inherited property (not our primary residence)
I also was told that we can deduct the Realtor Fee, the closing costs and the Title Company's fee and take the loss from the house. Is this so?
Would this fall under Capital Gains/Loss?
Has anyone ever used TurboTax and if so which one would I use? I purchased the Premier one. I have always done our taxes but with this sale of property it is new to me and I thought maybe TurboTax might be the way to go. What do you think?
Thank you so much for your help it is greatly appreciated.
thirdfrt!!!
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Follow-Up Postings:
RE: Real Estate And IRS Question
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| I do not think that you can take a loss on the property, unless it was income producing, and perhaps not even then. And all costs related to selling and closing the sale will be deducted from the proceeds. As for taxable income, I don't think you will have any. I seriously suggest that you discuss this matter with a tax professional. Or at least spend a lot of quality time with IRS's Publication 17, available online. |
RE: Real Estate And IRS Question
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| I seriously suggest that you discuss this matter with a tax professional. Thank You. thirdfrt!!! |
RE: Real Estate And IRS Question
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| I agree. Consult a professional. But I do not think you can take a loss on this. I don't believe the appraisal has any bearing. Essentially you got this house for free and sold it for $65,000, less some expenses. Now, while you can deduct most or all of those expenses as an adjustment to the selling price, that is the only "loss" I think you can claim. |
RE: Real Estate And IRS Question
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| You inherit real estate at the value as of the date of death of the owner. A stepped-up basis. If the person signed over the house to you before death, then yes, you would get it at a zero-cost basis (plus the original owner would owe gift tax). Still can't take a loss, unless it was income property (I think). (I am not a CPA nor do I play one on TV....) |
RE: Real Estate And IRS Question
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| Good question I don’t know the answer but I do know you would have had to pay capital gains if you would have sold the house for more than the appraised value. See a professional and come back and let us know the answer. |
RE: Real Estate And IRS Question
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Thirdfrt,
Just for your information,
The basic inheritance, is the cost mom paid for it and the money you received for the house, the difference is technically your capital gain, minus all fees to sell it.
Ex- mom paid 5,000.00 you sold for 100,000 and had 6,000 in fees to sell the home.
Technically, you made 89,000.00 on the property.
I would consult a tax professional for read up online at the irs website on inheritance and capital gain.
I don't think you would pay any capital gain on the house only because it was an inheritance and depending on the amount of money, which is small, you probably don't have any tax on it.
You can't claim a loss on a situation where you can't prove you actually lost money by selling the property, which you didn't, because you didn't pay for the property and it has accumulated some value since your mom bought it. |
RE: Real Estate And IRS Question
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| Here's some info on step-up valuation of inherited property. Note that the rules change for 2010 only. The paragraph is about three or four down the page. |
Here is a link that might be useful: Inherited property step up valuation
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