Inheriting the gift of a home is a positive experience, yet challenging at the same time… You are left with great property value you can use to improve your life, but likely you are still mourning the loss of a loved one. You may be surprised and relieved to find out the answer to the question, “what are the tax consequences when selling a house I inherited in Fort Worth TX?” The tax laws have been designed in a way they will not add any more burden to your life when inheriting the property. There are property taxes to consider. If they aren’t a part of an existing mortgage payment, be sure to familiarize yourself with any deadlines for property taxes. However, the financial consequences of selling an inherited property are not as daunting as you might expect which is good news for you. 🙂
Tax Consequences when selling a house I inherited in Fort Worth, TX
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a home, you need to know how basis is calculated. Basis, in this case, refers to the asset cost for purpose of the calculation of capital gains along with other taxes. When a person dies, the value or basis of their property in Fort Worth is increased to the market value at the time of their death. For instance, if a person purchased a home 20 years ago for $25,000 but it was worth $100,000 at the time of their death, that property would be valued at the latter amount on the death date for the purpose of calculating capital gains. Put a bit more simply, when you inherit a property, the value of the property resets on the day of the original owner’s death. If or when you sell, you are usually only taxed on the increase in value from the point in time that you inherited the property to the value the property is sold for. This amount is the capital gains.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. Such can be houses, furniture and many more things. If you decide to sell an inherited home in Fort Worth, that sale is regarded as capital gain or loss for the purpose of income tax.
In most cases, for you to qualify for lower rates of long-term capital gains, you are required to have held that property for at least a year. However long the duration you have been in ownership of an inherited home, any gain or loss will still be treated as long-term. You may be eligible for the home sale tax exclusion if you live in the home as your primary residence for a total of at least two out of five years prior to selling it. Tax laws change and are different in every state so it is best to discuss the sale and proceeds with your tax professional when you sell. But the home sale tax exclusion allows you to exclude up to $250,000 of the gain if filing single and up to $500,000 if married filing jointly.
Reporting the sale
Upon selling an inherited home, you have to report it for the income tax purposes. You should first calculate your capital gain or loss. This is done by subtracting the basis from the sale amount. You should then report that amount to the necessary authorities.
Having an inherited home can be stressing given the fact that you have new property to take care of and pay taxes for it at the same time… You should go through the probate process in Fort Worth as the first step to selling your home. Once you have obtained ownership of the property you can proceed as you wish. If there are any other individuals involved in the inheritance, you should first agree with each other on that decision. You can then file a petition requesting the court to allow you to sell the property.
If you plan to sell you should then consider how much tax you are to pay. This will be paid against the capital gains or losses resulting from the sale of the house. You can call Texas Best Home Buyers now at (817) 808-4911 to undertake a smooth and legitimate sale of your home. We are local here in Fort Worth TX and we know the market here better than anyone else. If you are still asking yourself what are the tax consequences when selling a house I inherited in Fort Worth, then we would be happy to discuss it with you in more detail.
Selling an inherited house can relieve you of quite a burden. In addition to that, selling the property to an investor is a basic simple and fast process. Contact us for inquiries on how to go about things when selling your home in Fort Worth and we will be glad to help you.