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I have owned property since 1995 that my parents gave me. They

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retained life estate to the...
I have owned property since 1995 that my parents gave me. They retained life estate to the property. It is a trailer park. My parents did not depreciate it after transfering the property to me but they did continue to get income out of it. I have invested money in it but have not claimed any income and as a result have not depreciated the money I have put into it. My mother passed January 16, 2011 and my father passed in 1997. Now, the property is mine and I would like to sell it. Will selling it affect my social security and what kind of tax liability will I have?
Submitted: 6 years ago.Category: Tax
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Answered in 1 minute by:
10/3/2011
Tax Professional: Stephen G., Sr Income Tax Expert replied 6 years ago
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,239
Experience: Extensive Experience with Tax, Financial & Estate Issues
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Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

Selling the property won't affect your social security benefits, but it may affect the taxability of your social security benefits for the year of sale.

Stephen E. Grizey :

As far as the capital gain is concerned, depending upon the value of the trailer park, the trailer part would be included in your mothers gross estate and would normally receive a "step-up" in tax basis to the fair market value at her date of death as when property is subject to a life estate it remains in control of the life tenant and thus is included in the life tenant's gross estate upon death.

Customer:

I am going to sell it for $75,000. We have received $7150 in income this year in income. This is a fair price for the trailer park.

Stephen E. Grizey :

You will need to get an appraisal of the trailer park, including a possible business valuation, in order to determine the total fair market value at your mother's date of death. That should become your income tax basis & will be used to determine your gain or loss.

Customer:

Clearly, I am going to have to use an accountant this year. I usually do my taxes my self and have a consistent loss of 2000 to 3000 each year because I have other rental properties. I get approximately 2200 per month SS.

Customer:

Thank you for your help.

Stephen E. Grizey :

Well, if the trailer part is only worth $75,000., you may not need to get an appraisal, particularly if you sell it fairly quickly.

Stephen E. Grizey :

part = park

Stephen E. Grizey :

Please remember to "ACCEPT". Feedback, if you have time & bonuses where you think they are warranted are always most appreciated. I'll be happy to answer any follow-up questions you may have.

Stephen E. Grizey :

You should make sure you get an accountant who is familiar with estates, preferably a CPA.

Customer:

You have been a great help. I will sell most likely this month. I don't know how to do bonuses. How do I retain a copy of this info?

Stephen E. Grizey :

You'll need to right click and block it off then copy it & you can paste it to an email or Word & then print it.

Stephen E. Grizey :

there should be a spot after ACCEPT where you can leave a bonus if you are so inclined; it is completely voluntary of course.

Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,239
Experience: Extensive Experience with Tax, Financial & Estate Issues
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