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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53725
Experience:  29 years of experience as a tax, real estate, and business attorney.
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My father passed away in Sept 2012. He and his wife had equal

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My father passed away in Sept 2012. He and his wife had equal title in a vacation home in Wisconsin. He passed his share of the title to my brothers and myself. His wife, through lawyers, as gifts, is transferring her share of the house us as well. The house was estimated at $250,000 and I have 4 brothers. So, she made a gift to each of us in 2012 and will do the same again at the beginning of 2013. Some of my brothers want to sell their shares (valued at $50,000 each) to the others brothers. What taxes if any would have to be paid on the sale of those shares? Thanks for your help. Dave
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. North Carolina is not a community property state. Thus, when your father died, his 1/2 of the property received a step up in basis to its fair market value; his wife's 1/2 did not so her basis in her 1/2 is the purchase price (plus any improvements). Then, when the wife transfers her interest to you by gift, her basis carries over to you. So, when you sell it, presuming you sell it at the fair market value as of the date of death, you will have no gain on 1/2 of the sale; and you will have long term capital gain on the 1/2 you received as a gift...that gain being $125,000 (less 1/2 of the closing costs) in excess of 1/2 of the purchase price (plus 1/2 the cost of any improvements).

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