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My sister and I inherited my parents house when my mom passed

My sister and I inherited...
My sister and I inherited my parent's house when my mom passed away last year. It's currently sitting in a trust with my sister named as the trustee. We're thinking about selling it within the next year, and I'm wondering what the tax implications of that will be. The house is in California, was purchased for $58,000 and is currently worth approximately $1.1 million. There is no mortgage, it's completely paid off. Thanks for any assistance!
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Answered in 4 minutes by:
10/8/2013
Richard
Richard, Tax Attorney
Category: Tax
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You likely will have very little, if any, tax. The reason is that the original cost of the house is not relevant. Rather, when your mom died, the basis of the house would have been increased to its fair market value. Thus, when you sell it, if you sell it at that increased basis, there is no gain, and thus no tax. Only if the if the property sells for a price (less closing costs) in excess of the newly-stepped up basis, would there be any gain. In that case, it would be long term capital gain, and only on the sales price (less closing costs) in excess of the increased basis amount.



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