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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10095
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My father who lived in Peru (he is a non-citizen) gave my

Customer Question

My father who lived in Peru (he is a non-citizen) gave my brother and I his house as a gift in 2009 and he lived on it until he passed away. We sold the house last year. Do I have have to pay taxes from this sale?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

hi,

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Yes, IRS taxes all income (to US citizens and tax residents) regardless of where the income was generated

Expert:  Lane replied 1 year ago.

However...

Expert:  Lane replied 1 year ago.

You get, because the asset was inherited, what's called a step-up in basis ... meaning that the basis for purposes of calculating your capital gain is "stepped-up" to the fair market vcalue on the date of death

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Capital gain is SALES PRICE MINUS BASIS

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So if, say, the house were worth 100000 in 2009 and you sold it for 110000 you would each gave a 5,000 gain

Expert:  Lane replied 1 year ago.

Also, you'll get the lower LONG-TERM capital gain rate, because you received the house in this manner.

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Long-term gains ares 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
Expert:  Lane replied 1 year ago.

Please let me know if you have any questions at all.

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If you'd like to tell me how you file (single, joint, etc), your other income for the household, the market value of the house in 2009 and what you sold it for, I can help you calculate the tax

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Lane

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If this HAS helped, your positive rating … (by clicking or touching the stars or smileys on your screen) … would be appreciated!That’s how we’re credited for the work here.

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let me know

Expert:  Lane replied 1 year ago.

Hi,

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I'm just checking back in to see how things are going.

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Did my answer help?

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Let me know…

….

Lane

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