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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I am selling my mothers house she passed away 9 months ago.

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I am selling my mothers house she passed away 9 months ago. In 1997 she had me sign a quick claim deed. So I own the house. I do not live in it. I am retired and disabled. So my income is limited. I would like to know what the capital gains will be on the house.I have SS. and a small PERA. About $1,600 a month

Hello Customer,


Since your mother signed the home over to you back in 1997, this is basically considered a gift that she gave to you. When you receive property as a gift, you retain the same basis as the donor. So your basis in this home would be the same as your mother's basis. Her basis would have been whatever she originally paid for the home plus the cost of any improvements she may have made while she owned it.


If you also made improvements after you took over ownership in 1997, you can also add the cost of those improvements to your basis.


Your gain from this sale is calculated by taking the sale price, less your basis, less the cost of any selling expenses such as real estate commissions. That gain is then taxed as a long term capital gain which currently has a maximum tax rate of 15%.



Thank you



Merlo and other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Because I will be financeing this to the buyer,I will not get all the money up front just the down payment. At what point is it capital gains?

Hello again Customer,


If you are financing the sale of the house, you have the choice of either paying tax on the entire anticipated gain in the year of the actual sale, or you can report the percentage of the gain you have each year as you receive payments. If you choose to report the sale and pay taxes using the installment method, then you only report the percentage of the gain that you have each year.


In other words, if the home is going to be paid off over a period of 10 years in equal installments, you would report 10% of the total gain for each of the next 10 years that you file your tax return.



Thank you