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Jason M. Tyra, CPA
Jason M. Tyra, CPA, Certified Public Accountant (CPA)
Category: Capital Gains and Losses
Satisfied Customers: 178
Experience:  Principal at Jason M. Tyra, CPA, PLLC
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My sister and I inherited a house and property from our

Customer Question

My sister and I inherited a house and property from our Mother. We recently sold it after inheriting it in 2012. How can I estimate my capital gains tax?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Jason M. Tyra, CPA replied 1 year ago.

Hi There:

Inherited property gets a basis that is equal to its fair market value at the time you inherit it. When you sell, your capital gain on the property is equal to the difference between your basis and the selling price, minus any costs of sale. Your basis could be adjusted over time from the original value by things like improvements (increase), depreciation (decrease, if a rental property), and casualty losses (decrease).

Your capital gains tax is equal to your applicable capital gains rate (0%, 10% or 15%, depending on your level of income) multiplied by your gain on sale. For example, if the property was worth $100,000 when you inherited it and you sold it for $110,000, your capital gains tax would be $1000 if you are in the 10% bracket.

Customer: replied 1 year ago.
The house and property were for sale for three years. No improvements were made. The original tax basis for the house and property was 150,000. The house and property sold for $325,000. How do I calculate the taxable amount?
Customer: replied 1 year ago.
The taxable amount is not necessarily based on the value of the proiperty
Expert:  Jason M. Tyra, CPA replied 1 year ago.

If, by original tax basis, you mean the fair market value when you inherited the property, then gain on the sale would be $175,000. The taxable amount in this transaction would be $175,000, unless you meet the principal residence exclusion criteria (i.e. one or more of the heirs occupied the property as a primary home prior to the sale), or have some other reason to claim tax-free treatment.