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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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My Mothers basis in her house is $100,0000. The FMV is $500,000.

Resolved Question:

My Mother's basis in her house is $100,0000. The FMV is $500,000. If her taxable income is $100,000 before the sale, what would she pay in capital gains? If she does not see the house, and her total estate is worth $5.5 million, what would the estate pay in tax if she passes away in 2011?
Submitted: 5 years ago.
Category: Tax
Expert:  RD replied 5 years ago.

RD :

IS this her primary residence? Did she use this house as her primary residence for atleast 2 years? What State is she a resident of?

JACUSTOMER-ymtio6yv- :

this has been her primary residence for the past 30 years, until July 1, 2010 when she moved to assisited living. She is in California.

RD :

Is she sells the house now than she will owe tax on the net capital gain. She will be able to exclude $250K($500K if she is married filing joint and spouse meets the use test) of the gain.

RD :

Hence she will owe tax on gain in excess of $250K.

RD :

The gain will be long term and taxed upto a maximum of 15%.

RD :

For 2011, the estate tax applies on estate over $5 mn.

RD :

You can exclude $5mn worth of estate from taxation

RD :

So, it may be a good idea to sell the house now and use the exclusion.

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