How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Ed Johnson Your Own Question
Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Type Your Tax Question Here...
Ed Johnson is online now
A new question is answered every 9 seconds

I sold a house that was willed to meby my parents and recieved

Resolved Question:

I sold a house that was willed to meby my parents and recieved $80,000. When it comes to income taxes how does this work? Is this concidered income and I have to claim all $80,000?
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.

Dear RJ,


Thank you for your question.


This would be considered a capital gains situation.


The property you inherited would have had, as a cost basis to you, the FMV or Appraised value as of the date of death. That value should be reflected in the estate tax return.


When you sell the property you have to determine the capital gain. You would pay taxes on the gain, if any.


If the 80,000 was close to the FMV, then little or no gain will be realized and there would be no tax.


The capital gains formula for you will be:


Capital Gains (inherited property) = 80,000 - (FMV as of date of death, + improvements and additions if any, + major repairs if any) - cost of selling.


Major repairs are repairs you might have made befor selling it that were meant to last one year or more, such as roof, floor, etc.


If there was a gain, AND you were in a tax bracket determined by your adjusted gross income of 15 percent or more, then the capital gains tax is 15 percent.


If there is a gain and you are in a tax bracket of 15 percent or less, then there would be no capital gains tax, because your capital gains tax rate in those lower brackets is zero.

Expert:  Ed Johnson replied 8 years ago.

Dear rj,


I wish to add a small addendum to my response. If the capital gains, if any, pushes your tax bracket over 15%, then the portion of gains that exceed the 15% bracket woud still be taxable at 15%.

Customer: replied 8 years ago.
I take it that Capital Gains is any amount over the appraised value of the house? What if the appraised value was higher then what the house sold for? Would this be a tax deduction?
Expert:  Ed Johnson replied 8 years ago.

Dear rjpro,


Essentially yes, minus any improvements, major repairs, and the cost of selling it.


If it appraised higher then the sale price, or if the FMV was higher than the sales price, then it would be a capital loss. It is only deductable to the extent that it can offset other capital gains. Other than that it is a personal loss and not deductable.

Ed Johnson and other Tax Specialists are ready to help you