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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My aunt died in 1959 and left her property to me and my two

Resolved Question:

My aunt died in 1959 and left her property to me and my two siblings jointly with life time tenancy to our mother. Our mother passed recently and we are thinking of selling the property. With capital gains of 90,000 would we have to pay capital gain taxes on the inherited property.
Submitted: 5 years ago.
Category: Tax
Expert:  Merlo replied 5 years ago.
HelloCustomer

You would be liable for capital gains on any gain you had from the sale. Your gain would be calculated by taking the selling price less your basis in the home.

On inherited property, your basis is whatever the fair market value was of the property on the day you inherited it. In addition, you may add to that the cost of any capital improvements you made to the property during the time you owned it.

If you have a gain, it would automatically be taxed at the long term capital gains tax rate which is currently capped at 15%, so that is the maximum amount of tax you would pay on any gain. If you are in a lower income tax bracket, it is possible that a portion of your gain would qualify to be taxed at -0- percent, but that depends on your tax bracket and the tax brackets of the other 2 heirs.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.
Customer: replied 5 years ago.

For the lower tax bracket is the amount of capital gains added to the AGI to determine the amount at 0% and the remainder at15%.

i.e.

AGI=45,000

Capital gains = 30,000

16,000 at 0%

14,000 at 15%

Expert:  Merlo replied 5 years ago.
Hello againCustomer

It depends on your filing status and your tax income.

For an example, for the year 2008, if you are filing your tax return as a single taxpayer, if your taxable income is:

$0 to 8,025 - you pay 10%
$8,025 to 32,550 - you pay 15% plus $802.50
$32,550 - to $78,850 - 25% plus $4,481.25

Let's just say for example that your taxable income (without this sale) was $25,000. Using the chart above, you can see that you still have a "float" of $7,550 before you would go to the next tax bracket which is 25%. That means that $7,550 of any capital gain would qualify to be taxed at zero percent. Any capital gain over that amount is taxed at 15%.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you

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