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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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If you are an heir to a reverse mortgage property and sell

Customer Question

If you are an heir to a reverse mortgage property and sell the property to pay of the reverse mortgage what taxes are you responsible for? It it just on the gain that was received after the loan and closing costs or is it on the entire sale price of the home?
Submitted: 7 months ago.
Category: Tax
Expert:  Lev replied 7 months ago.
On inherited property - we have so-called stepped up basis equals to the fair marker value of the property at the time the decedent passed away.The gain on the sale is calculated as(selling price MINUS (basis) MINUS (selling expenses)That means - if the property is sold shortly after it was inherited - there likely will not be any gain.The mortgage balance i snot relevant for determination of the gain.When mortgage was taken - that was not included into taxable income - correct?So - when it is paid back - it is not deductible either.
Expert:  Lev replied 7 months ago.
The gain on the sale is calculated as(selling price MINUS (basis) MINUS (selling expenses)That means - if the property is sold shortly after it was inherited - there likely will not be any gain.The mortgage balance is not relevant for determination of the gain.When mortgage was taken - that was not included into taxable income - correct?So - when it is paid back - it is not deductible either.Let me know if you need any help with reporting..I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.