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Merlo
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Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have been left a house (deceased family member). The property

Resolved Question:

I have been left a house (deceased family member). The property is in England. I live in Illinois where I am both a resident and a home owner.
My understanding is that whenever I sell the property in England (which I will not be living in nor renting out and will likely own for more than 366 days) I will have to pay capital gains tax.

However, I am wondering how the assessment for the tax is made.

I understand that if I had bought the house then any gains I had made from the sale of the house would be calculated based on the difference between my purchase price and my sales price. However, since I have not purchased the house how is it calculated? Is it assessed from fair market value of the property when the title transfers to me?

Thanks
Sho
Submitted: 5 years ago.
Category: Tax
Expert:  Merlo replied 5 years ago.
Hello chi,

When you inherit property, you automatically receive a stepped up basis in the property. That means that your basis will be whatever the fair market value is of the home on the day that the deceased person died.

When you sell the home, you will owe long term capital gains tax on any gain, which would be the selling price less your basis.

You do not have to wait 366 days to sell the home in order for it to be treated as a long term capital gain. Inherited property which is sold automatically qualifies to be treated as a long term capital gain, even if you sell the property immediately after you inherit it.

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

Thank you chi.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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