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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53721
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I along with my best friend purchased a home in 1993 for $135,000.

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I along with my best friend purchased a home in 1993 for $135,000. We bought the house under right of suvivorship. He lived in the house I lived in another house I had purchased solely in 1998. He passed away in Jan of 2011. I sold the home in March of 2011 for $265,000. I paid all expenses including mortgage payments(1st and 2nd) utilities and all repairs needed to close. It closed April 18th. This was not my primary residence as I still have my own home. Are the capital gains figured on what I walked away with (profit) at the closing table and am I allowed to deduct all expenses that I had to pay? I did use a real estate company.

Good morning. Each of you had an original basis in your house equal to 1/2 of $135,000 = $67,500. You would have increased your basis by any improvements to the property, but not repairs, utilities or mortgage payments. When your best friend died and you inherited his 1/2, the basis in that 1/2 was increased to the fair market value of the property times your basis in his 1/2 is now 1/2 of $265,000 = $132,500. So, your taxable long term capital gain = Sale price (less closing costs) in excess of your basis ($67,500 + $132,500 + any improvements you made to the property).



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Customer: replied 4 years ago.
I don't understand. Will I be paying capital gains on $265,000 the sales price or the $84,000 which is what I received at closing.
You will have a gain of the $265,000 less your basis of $200,000 ... $65,000 less the closing costs of the sale. What you receive after the payment of your mortgage owed is not relevant.
Customer: replied 4 years ago.

In your professional opinion should I have a tax attorney file my claim this year vice a CPA? The last person I want to get in trouble with is the IRS.

No...this is not going to be complicated for them....the CPA can easily handle this.
Customer: replied 4 years ago.
Thank you - I appreciate your time.
My pleasure. You take care.
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