Mom passed and I am executor of the will. As agreed by my other siblings, we will need to sell her house (have the estate acct set up already) I have 2 other siblings, where my mother indicated on her will, that the sale of the house would be split up evenly (a third each). My mother purchased her house 45 years ago at 25,000 and now the house's market value is approximately 475,000.00. Once the sale goes through, will we all get hit for capital gains on an inherited house's sale? Will we get hit on any tax pertaining to the sale of the house?Thank you for any advice you can give me.
2 Answers from Attorneys
Please accept my condolences on the loss of your mom.
The general rule is that the cost basis of property in the hands of the estate is whatever the value of the property was on the date of death. So if the house was worth $475,000 when mom died, and you sold it for the same amount, there isn't going to be any gain, and therefore no tax. Lots of things can impact that result, but that's the general rule.
Once again, please accept my condolences on the death of your mom.
I agree with with my colleague, but add that sales/closing costs typically reduce any gain even further. Keep in mind that losses are not deductible but gains are (not fair but many tax rules are not). If you need an attorney for probate, and to represent the estate in the sale, please feel free to contact me. I may be reached at (646) 580-1350.