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You would be liable for long term capital gains tax on any gain that you recognized from the sale of your share of this property, which is 50%. To figure your capital gains, you need to take the selling price less your basis in the home. Your basis in this property is 50% of whatever the fair market value was of the property on the day your father passed away.
So as an example, if his beach home were worth $200,000 on the day he passed away, then your share of the basis would be $100,000. If you sell your half of the home to your sister for $150,000, then you would have a gain of $50,000 and would be liable for long term capital gains tax on that amount. The long term capital gains tax rate is currently capped at 15%, so the most you would owe in taxes in that example would be $7,500.
Keep in mind that when selling property to a relative you still have to sell at what is considered to be fair market value, or the difference will be viewed as a gift by the IRS. Also, if you sold your share to your sister for below market value, then 50% of your sister's basis in the house would be whatever that selling price was. If it was a low price then she has a lower basis, meaning that somewhere down the road if she sells the property then she ends up having a larger gain and pays more taxes.
Also, the above guidelines are based on the assumption that this beach home is not your primary home. To be considered your primary home you had to own the home for at least 2 years and you must have lived in the home for 2 of the past 5 years. If you do meet those qualifications then there are some exclusions you can claim on the sale, so let me know if that is the case and I will go over those rules with you.
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