Hello...my name is XXXXX XXXXX X am a Certified Public Accountant. I look forward to assisting you with your tax question.
Per the IRS website...Home acquired from a decedent who died before or after 2010. If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes.
This is an authoritative source and will take the concern out of what other people might have told you...
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We did not inherit the house, our names were on the deed, so we had new deeds made after my mom passed because the house was ours. Does this make a difference?
okay...there's a little bit of calculation that will need to be done here...
Your mom and dad purchased the house for $19,000....your mom's basis would be 50% of this amount from the beginning
she would then include 50% of all of the upgrades and improvements made to the house up until her husband passed away
Once her husband passed, she would add 50% of the FMV of the home (50% x $160,000) to her basis...through this method she is receiving credit for the basis of her husband
so mom's bases would be 58000 when dad died + 80,000. What would be my sister and mine's base then, 138000??
That's correct...because by adding you and your sister's names to the deed she essentially "gifted" you both her share of the house
Does this make sense?
You are receiving a carry over basis of the "gift'
so does the one time exemption apply here when my sister and i sell the house? The house has never been on the market
Are you referring to the capital gains exclusion of a sale of a primary residence?
or is there another exemption you are referring to?
capital gains of the exclusion when we sale. I am trying to figure out if the house sold for 145000 and my sister and I split, how much capital gains tax is due? Also we are donating alot of the furniture and stuff to Habitat for Humanity so will some of that value ease the tax burden?
Well the donations would be separate from the sale and would be considered a charitable contribution similar to any other charitable contribution you make. In order to benefit from a charitable contribution you would have to itemize your deductions rather than taking the standard deduction which would be included on Schedule A...as far as the capital gains tax treatment...you wouldn't qualify for the Section 121 exclusion because you would have had to meet several requirements in order to not pay capital gains tax on the gain in the sale (one of these requirements is that it must have been your primary residence for at least 2 years out of the past 5 years)...however...the capital gains tax should not be very large when you subtract your basis ($145,000 selling price - $138,000 basis) = $7,000 capital gain...split 50/50...both you and your sister would have a capital gain of only $3,500.
You answer all my questions
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I will thanks