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My sister and I are on deed of parents home. We lived in…

Customer Question
My sister and I...

My sister and I are on deed of parents home. We lived in home 20 yrs after and they are bothe dead now and my sister and I are selling house. What are my tax obligation. I left home to take my present job

Lawyer's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

NJ

Lawyer's Assistant: Has any paperwork been filed?

The house is sold for 173000.closing is 2 weeks

Submitted: 8 months ago.Category: Legal
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Answered in 5 minutes by:
9/15/2017
Lawyer: legalgems, Lawyer replied 8 months ago
legalgems
legalgems, Lawyer
Category: Legal
Satisfied Customers: 12,945
Experience: Just Answer consultant at Self employed
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Hello! I will be reviewing your question and posting a response momentarily; if you have any follow up questions please respond here. Thanks!

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Lawyer: legalgems, Lawyer replied 8 months ago

Are you referring to capital gains tax issues?

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Customer reply replied 8 months ago
I guess that's what it's called. Or is house gift?
Customer reply replied 8 months ago
Do yu have answer to my question?
Lawyer: legalgems, Lawyer replied 8 months ago

No, an inheritance is not a gift, and the heirs receive a "stepped up basis" for capital gains purposes so that any gains attributable to the original owner's ownership are essentially waived; one moment please.

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Lawyer: legalgems, Lawyer replied 8 months ago

Please see:

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances

For capital gains appreciation post death, there is an exception if the owner lived in the home as the primary residence for 2 of the past 5 years in which case the capital gains are not taxable up to $250k/$500k

https://www.irs.gov/taxtopics/tc701.html

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Lawyer: legalgems, Lawyer replied 8 months ago

Hello again; just checking in to see how things worked out;

If you have no further questions a positive rating is most appreciated (at no additional cost to you) and allows the site to credit my account for the time spent assisting you!

if you have further questions please don't hesitate to reach out to me here on Just Answerand I will do my best to get you the requested information.
Thanks!

The above information is for educational purposes only. A consultation with a private attorney is recommended so they can apply the law to your specific facts, and suggest the best course of action. An attorney can be located here:
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Customer reply replied 8 months ago
I am not satisfied. I got that info from internet and expected something more particular From lawyer.
Customer reply replied 8 months ago
It was not worth $47
Lawyer: legalgems, Lawyer replied 8 months ago

If you have any follow up questions please post here and I will do my best to get you the information.

The question was:

What are my tax obligation

-

and I believe the above information addressed that.

Thank you and the best to you and your sister!

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Customer reply replied 8 months ago
Is the basis for figuring the tax the amount I sold it minus the value when I was added to deed in 1985?
Lawyer: legalgems, Lawyer replied 8 months ago

It depends.

If the property was gifted, then the recipient would not get a stepped up tax basis but would use the prior owner's tax basis.

If it was inherited then the heir would receive the stepped up basis meaning that the taxes would be due on the difference between the inherited fair market value on the date of death, and any gains after that date.

I hope this helps!

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Customer reply replied 8 months ago
Our names were added to deed when parents were still alive in 1985 or 90 so that is gift correct? Then tax is based on value of house at that time divided by 2 sine it's my sister and I?
Lawyer: legalgems, Lawyer replied 8 months ago

Yes, that is a gift versus an inheritance.

The tax basis for the giftor is the same tax basis for the recipient (this is not the case for inheritance).

For gifts, the recipient uses the original owner's tax basis.

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Customer reply replied 8 months ago
tax is determined by value of property when we were put on deed divided by 2?
Where do I find out value of property then and how much is tax?
Lawyer: legalgems, Lawyer replied 8 months ago

Yes, that is correct; the value of the property can be determined either by any gift tax forms that were filed (form 706) or one can retroactively determine it by having an appraisal done by a licensed appraiser.

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Lawyer: legalgems, Lawyer replied 8 months ago

Does that make sense?

I want to make sure you have no further questions as I will be signing off shortly.

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Lawyer: legalgems, Lawyer replied 8 months ago

You had mentioned you weren't satisfied and then asked follow up questions. Did that answer your inquiry?
If so please consider rating my services positively so the site credits my account for time spent assisting you.

Thank you!

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