How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Merlo Your Own Question

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
9573734
Type Your Tax Question Here...
Merlo is online now
A new question is answered every 9 seconds

i was told that there is no inheritance tax in ny but we have

Customer Question

i was told that there is no inheritance tax in ny but we have to pay capital gains. i would like to find out how many percent we have to pay on capital gains from the house that we inherited from our grandmother?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello Customer,

 

Can you please tell me what year your grandmother passed away?

 

What was the value of her entire estate at the time of her death?

 

Is your grandmother's home located in NY?

 

 

Customer: replied 4 years ago.

Hi Merlo,

 

Grandma passed away last year in October and she lived in East Meadow in Long Island.

 

there is no estate it's only the house that she and may grandpa lived for many years so i don't know how much is the value of her property.

 

we sold it for 385,000.00 and we had a closing yesterday and the attorney said that we have to pay 22% capital gains so we are all shocked!

 

Expert:  Merlo replied 4 years ago.

Hello again Customer,

 

Your attorney is correct that you would pay approximately 22% in capital gains tax (15% federal and 6.85% for state of NY) -- BUT that will not apply to the entire purchase price, and may not even apply at all unless you had a gain from the sale.

 

Since your grandmother passed away in 2009, you are entitled to a full stepped up basis in the property. What that means is that your basis becomes whatever the fair market value was of the property on the day your grandmother passed away. If you later sell that property for more than your stepped up basis, you pay taxes only on that excess amount.

 

Often times when a property is sold within a short period of time after it is inherited the sale price ends up being the same as what the value was on the day you inherited it. When that is the case, there is no gain and no tax is due. So the only way you would owe any tax on this sale is if the property was worth less than $385,000 on the day you inherited it. Let's just say the property was worth $370,000 when your grandmother passed away. If you now sold it for $385,000 you would have a taxable gain of $15,000 and would owe approximately $3,300 for federal and state taxes. But if the property was worth $385,000 when your grandmother died, then you have no gain and you owe no taxes on this sale.

 

 

Thank you Customer

 

 

Customer: replied 4 years ago.

okay, so in that case if the price of the property is the same we don't have to pay any capital gain tax but what confuses us was the deed was transferred to me and my siblings in 2006 do we have to pay capital gain from the date the deed was transferred to our name?

Expert:  Merlo replied 4 years ago.

Hello again Customer,

 

Unfortunately that changes the entire answer that I gave to you, and also has a great impact on the tax you will owe.

 

If your grandmother transferred the deed to this property to you prior to her death, then that is considered by the IRS to be a gift. A gift is not the same as an inheritance. When you receive property as a gift, you retain the same basis as the donor. So you would not receive a stepped up basis in this home. Your basis would be whatever your grandmother's basis was, which is basically what she originally paid for the home plus the cost of any improvements she may have made.

 

Obviously if your grandmother purchased this home years ago at a much lower price, that will end up giving you a much larger gain on which you will owe the same tax rates of 15% federal and 6.85% NY state tax.

 

In your first post you talked about inheritance which is why I gave you the rules on taxes due on the sale of inherited property. But this in fact was not an inheritance that you received, but instead it was a gift which has totally different rules in determining your basis.

 

 

Thank you Customer

 

 

Customer: replied 4 years ago.

Hi Merlo,

 

i'm sorry.... i thought it's the same. our father said at the time it was transferred to our name it was on the basis of lifetime estate so we don't have to pay taxes on it once opur grandmother passed away.

Expert:  Merlo replied 4 years ago.

Life estates are yet another entirely different issue. Because the nature of this question continues to change, I have decided to opt out to see if someone else here can better assist you with this. You will receive an email notification if someone else posts an answer to your question.

 

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.