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Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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5 children to sell parents home (1 of 5 is Executor). How

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5 children to sell parents' home (1 of 5 is Executor). How do we minimize capital gains- Will all 5 pay capital gains or can this be paid once on sale amount, then disburse proceeds to the 5 children ?
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.
Hello calamine,

Did the children inherit this home or were they listed as home owners prior to the death of the parents?

If the home was inherited, what was the fair market value at the time the inheritance was received, and what price will the house now be selling for?
Customer: replied 8 years ago.
home left to children in inheritance- 5 way split. Fair Mkt to be determined w/ appraisal tomorrow ($225,000 range)
Expert:  Merlo replied 8 years ago.
Hello again calamine,

Thank you for the additional information.

The first answer is that all 5 children will each pay their share of any capital gains tax that might be due. However, if the home was recently inherited and is now being sold, there will likely be little or no gain to pay tax on.

When you receive property through inheritance, the beneficiaries receive a stepped up basis in the property. What that means is that your new starting basis in the home is whatever the fair market value is on the day you inherited the property. Your gain is figured by taking the sale price of the home less your new basis. If you sell the property soon after the death of the decedent, then chances are you will be selling it for the same market value as your basis, and you will have no gain.

Whatever gain you might have would be split 5 ways and the gain is taxed as a long term capital gain. The rate for long term capital gains is currently capped at 15%, so that is the maximum amount you would pay on any gain from the sale of this property.

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Thank you calamine, and let me know if you have more questions.

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