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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10142
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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In 2001 my mother purchased a home in Arizona and added my name to the Deed. It was title

Customer Question

In 2001 my mother purchased a home in Arizona and added my name to the Deed. It was titled joint tenants with rights of survivorship. She died recently. I never lived in the home. What kind of federal taxes will i owe. She paid $205,000 for the home and it is now worth $330,000.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
Hi,
First, I'm sorry for your loss...
Now, there will be no federal ESTATE tax (unless you mother's estate was over the exemption amount of $5,430,000 for those passing in 2015).
The capital gain you pay upon any future SALE of the property will tie to your ownership interest.
As you probably know Capital gain = Sales price MINUS basis.
(and basis is typically your purchase price UNLESS you were GIFTED an asset)
Gifted assets have what's called carryover basis, which means that the GIVER's basis carries over to you, the recipient of the gift.
SO your basis in the HALF of the property that was gifted to you is 1/2 of her original purchase price.
Now, there's another aspect of gain, when someone is left an asset through inheritance (or through joint ownership and one of the owners dies)...
... assets transferring to you at someone's death get what's called a "step up," in basis. The basis in anything you INHERIT is "stepped up" to the Fair Market Value as of the date of death.
So lets say that you sell the home fairly quickly, before the fair market value of the home has time to go up in value.
She paid 205,000, so the basis in the half that you already owned before she passed is 102,500.
YOu basis in the other half IS the 1/2 of the fair market of 330,000;
165000
So your total basis is 102500 + 165000 = 267500
So if you sold today at 330,000 the gain would be 330,000 - 267500 = 62500
And this is all long term gain (assets received through death are always long term ... and you've had your other interest in the property since 2001).
Long-term gains and qualified dividends are taxed at
*0% if taxable income falls in the 10% or 15% marginal tax brackets
*15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets
*20% if taxable income falls in the 39.6% marginal tax bracket
So lets say that the gain plus any other income for the tax year that you sell puts you in the 25% bracket, your tax on the GAIN would be 62500 x .15 = 9375
If you'd like to give me a ballpark estimate of your household income and how you file (married, jointly, and any Dependants, or single with and Dependants, etc) I can see where you are in the brackets and give you a more specific answer
let me know if you have questions ...
lane