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Lou
Lou, Tax Preparer
Category: Tax
Satisfied Customers: 404
Experience:  25+ yrs Experience Personal Income Taxes - Former DM for H&R Block in California
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I inherited a house when my mother passed away. I sold it ...

Customer Question

I inherited a house when my mother passed away. I sold it for $150,000.00, do I have to pay taxes on the money I received?
Submitted: 6 years ago.
Category: Tax
Expert:  Lou replied 6 years ago.

Thank you for contacting Just Answer. We appreciate the opportunity to be of service to you.

What was the value of the house when your mother passed away

Customer: replied 6 years ago.
around 450,000.00. Split 3 ways. My brother, cousin and me.
Customer: replied 6 years ago.
I should clarify my questions. We sold the house for 450,000.00 and split the money 3 ways. do I have to pay taxes and how much?
Expert:  Lou replied 6 years ago.
If that was the only asset in the estate you should have no tax liability. You would have a long term capital gain if you sold the property for more than it was valued at the time of your mother's passing, It seems from your answer that you sold it for what is was valued at.
Lou, Tax Preparer
Category: Tax
Satisfied Customers: 404
Experience: 25+ yrs Experience Personal Income Taxes - Former DM for H&R Block in California
Lou and other Tax Specialists are ready to help you
Expert:  Lou replied 6 years ago.

Here is a link to the IRS that discusses your question:

http://www.irs.gov/faqs/faq4-7.html

If you have any further question, contact me

Thanks again

Lou, Tax Preparer
Category: Tax
Satisfied Customers: 404
Experience: 25+ yrs Experience Personal Income Taxes - Former DM for H&R Block in California
Lou and other Tax Specialists are ready to help you
Customer: replied 6 years ago.
I was sent a 1099 S form. with the amount that I had received for my portion of the sale of the house. Does this form mean that I have to pay taxes.
Customer: replied 6 years ago.
Does the 1099 S form mean that I have to pay taxes on the amount?
Expert:  Lou replied 6 years ago.

Sorry for the delay in responding to your last question but my internet service went down.

If the property was sold for more than the value of the property at the time your mother passed away then you would have a long term capital gain and report it on Schedule D as such.

Therefore if the property was valued at less than $450,000 when you inherited it then you would have to report the gain from the sales (minus any expenses of sale) on Schedule D as a long term capital gain.

You indicated that it was worth $450,000 at the time of your mother's passing and you sold it for that amount. If that is correct then you have no tax liability but you still have to report the sale on Schedule D as a long term holding. However in Column "f" the gain/or loss would be $0.

The IRS is expecting to see the proceeds accounted for but there is no tax if there is no gain.

I hope this helps clear up your question, but if you have additional questions about this contact me back.

Thank you.

Customer: replied 6 years ago.
The house was sold about 4 to 5 years after she died. When she died the house was worth about 250,000.00. When it was sold it was worth about 450,000.00. Will I have to pay capital gains taxes.
and what about something called a "final trust tax return" and a K1 form. I spoke to an H&R Block office today and I was told that if I don't want to pay taxes on the money that I could see if a "final trust tax return" had been completed. Well I haven't received a K1 form yet, so does that mean that final trust tax return has not been filed? And who filesit, the Executor of the Trust?
Customer: replied 6 years ago.
The house was sold about 4 to 5 years after she died. When she died the house was worth about 250,000.00. When it was sold it was worth about 450,000.00. Will I have to pay capital gains taxes.
and what about something called a "final trust tax return" and a K1 form. I spoke to an H&R Block office today and I was told that if I don't want to pay taxes on the money that I could see if a "final trust tax return" had been completed. Well I haven't received a K1 form yet, so does that mean that final trust tax return has not been filed? And who filesit, the Executor of the Trust?
Customer: replied 6 years ago.
I didn't receive your answer.
Expert:  Lou replied 6 years ago.

Sorry forthe delay but my internet service has been giving me fits all day.

In my first question to you on 3/24 I specifically asked you to give me the value of the house when your mother passed away. Your response was $400,000. Now it seems that you are saying the house was valued at $250,000 at the time of your mother's death. That creates a capital gain of $200,000 that will be split among the heirs in the proportion they received the proceeds.

As I stated in an earlier response:

If the property was sold for more than the value of the property at the time your mother passed away then you would have a long term capital gain and report it on Schedule D as such.

Therefore if the property was valued at less than $450,000 when you inherited it then you would have to report the gain from the sales (minus any expenses of sale) on Schedule D as a long term capital gain.

One other question what was the house used for over the last 4 or 5 years?

Also, I inquired earlier about the total value of you mother's estate when she passed away. and don't think you gave me that information. Depending upon the year she died and the total value of the estate an estate tax return may not have been required.

Customer: replied 6 years ago.
The value of my mothers house when she passed away was around $250.000.00. My brother and cousin lived in the house for about 4 - 5 years after she passed away then decided to sell it. By the time we decided to sell the house it had grown in value and was worth twice as much as before, $450,000.00. I understand from the H & R Block people out here that we could substantially reduce our tax payment by completing a "final trust tax return". Also, if I didn't live in the house will that make a difference in how much taxes I pay.

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