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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29580
Experience:  Taxes, Immigration, Labor Relations
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If an estate owns the personal residence of the deceased party,

Customer Question

If an estate owns the personal residence of the deceased party, does the sale of the personal result in a tax gain or loss?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!
That is correct - the estate may realize either the gain or loss on the sale.
The issue is that when the property is inherited - it gets so-called stepped up basis equals to the fair market value (FMV) of the property at the time the decedent passed away.
So if the property sold shortly after that - most likely - there is no gain,
but if the property appreciated after the decedent passed away or there were substantial improvements - there might be a gain.
However - the most common situation - when the estate realizes a small loss.
For instance.
Assuming the FMV is $200k at the time the decedent passed away - and that is the basis.
So when the property sold shortly for the same $200k - and $10,000 were Realtor fees and other sale expenses - so in this example - the sale would result $10k capital loss.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.