My father passed away and since his house in CO was quitclaimed to me back in 2003, it became mine. I sold it for a few thousand more than it was purchased for in 1998. What kind of tax liability do I have?
Did you ever actually live in that home yourself and use it as your primary residence?
I was stationed overseas in the US Army. I used the home as my address but only lived there was I was at home on leave. I was in Japan from 1999 to 2007 and in Texas from 1998 to 1999.
Hello again Trajan,
Do you think that the entire time you spent living in that home since 1999 when you were home on leave would have constituted a 2 year period, even though the times were not consecutive?
No--it would only add up to a few months at most. It was purchased in 98 for 198K and I sold it last June for 202K (bad time to sell but I could not afford the payments).
Okay, I was thinking I could save you some tax dollars here, but if you did not live in the home for at least 2 years total, then the credit they allow for that would not apply.
In that case, your father basically "gifted" you the home when he signed the quitclaim deed. What that means is that you assumed his basis in the home, meaning that whatever he originally paid for the home becomes your cost as well. You can add to that the cost of any capital improvements you made to the home while you owned it.
If you made no capital improvements and the original purchase price was $198,000, then your only gain was $4,000. This will be taxed as a long term capital gain and that tax rate is currently capped at 15%, so $600 is the very most you will owe in federal taxes on this sale. If you are under the 25% tax bracket, then part of your gain may actually qualify for zero % taxes. State taxes will also apply and will also depend on your current tax bracket.
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25+ years tax consulting. Specializing in returns for US citizens living abroad