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Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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A cottage was willed to my sister and me as a gift by my mother

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A cottage was willed to my sister and me as a gift by my mother when she died in 1947. As The cottage is in Michigan and I moved to Norway (europe) in 1970. As I have only used the cottage 4 times during this years, my sister has now bought me out - but we divided the taxes and insurance in the meantime. I have to report this transaction as Capital gain on my 2010 tax return. How do I figure the tax rate? I am an American citizen so file a return every year because I have a savings account and some stock in the US, as well as a pension (Social security)
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Hi there. You would have a capital gain based on the amount you sold your interest to your sister for less your basis in that interest. Your basis would be the value at the date of inheritance plus any subsequent improvements made. Your tax rate then would be: i) if your marginal income tax rate is 0% to 15%, then you would owe no capital gain tax; ii) otherwise, you would owe 15% on the gain.



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