Legal Question in Tax Law in California

Re: Seeking lowest tax on recent sell of house;capital gains exposure

In order to correctly and completely answer this question, the following documents and information are needed:

1. A copy of all deeds beginning with when your father purchased the house up to an including the sale in 2003.

2. The purchase price of the house (a copy of the escrow documents).

3. A copy of his will and any probate documents related to the house.

4. The fair market value of the house at the date of your father's death (appraisal or probate documents).

5. The sale price of the house and any expenses of sale (a copy of the escrow documents).

6. The dates your father and/or mother used the house as their principal residence.

SEE http://www.irs.gov/pub/irs-pdf/p523.pdf

Re: Seeking lowest tax on recent sell of house;capital gains exposure

Assuming that this is your mother's primary residence, she is entitled to an exemption of $250K from any capital gains.

Therefore, if she paid normal commissions of about $20K, that would leave $295K. If the basis is $45K or more, she has no capital gains tax.

The basis would be adjusted based upon a couple of factors. What the property was purchased for and its value at the time of the fathers death.

Bottom line is that you have little or no capital gains tax, and a good tax preparer should be able to help you.