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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3362
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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NY property gain/loss form resident. I inhereted the land

Customer Question

NY property gain/loss form for non resident. I inhereted the land from my family. I am the sole owner. Sold off the house and 8.5 ac in the Adirondacks. Now I am in the process of selling the rest 487 ac. How do I calculate the from? Do I add the inherited basis values to the basis value after I sold the house and land? Or, only the basis value after the selling of the house and land?
Submitted: 1 year ago.
Category: Tax
Expert:  barristerinky replied 1 year ago.

Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.

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Was the property appraised when you inherited it from the estate of whoever passed?

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If so, was the house appraised separately from the remaining land as the "structure" on the appraisal and then a "land value" assigned so as to break it down?

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thanks

Barrister

Customer: replied 1 year ago.
Only assessment is based on the assessors. Tax is based on 100% on the land value. Therefor, I have the tax value for each part inhereted and for the tax value before and after the sale. The house and land sold $59,000.00 house valued at 52,000.00. I guess land valued 7,000.00 foe 8.5 ac.
Expert:  barristerinky replied 1 year ago.

Ok, I think that this is best addressed by one of the tax experts who are intimately familiar with NY tax laws as they do impose additional taxes at the state level over and above any federal capital gains taxes.

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I am going to opt out and notify the moderators to transfer this over to the Tax category so you can get more detailed help.

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thanks

Barrister

Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

In each instance of sale, you will pay capital gains tax to New York on the difference in your basis and selling price. Because you inherited the property, your basis would be the FMV (not the assessed value) of the property at the time of the death of the person from whom you inherited the property. The selling price is the agreed upon purchase price less closing costs, real estate commissions, etc.

For example, for the house and land transaction, if the FMV of that portion was $59,000 and you sold the house for $59,000, there would be no gain to pay tax on.

Same formula for the sale of the acreage.

Because you have the assessed value for each part that was inherited, it will not be difficult to prorate the percentage as it applies to each transaction. The basis of one transaction will not be used in the capital gains calculation for the other transaction.

Make sense?

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Customer: replied 1 year ago.
Not really.
1989 inherited land with my sister FMV $220,700.00 in Adirondacks making my grain $110,350.002004 my sister passes lands FMV $239,500.00 making my gain 1/2 or $119,750.002005 I sell the house and 8.5 ac for $59,000.00Today selling 487 ac for $305.00
Question what is my capital gain/loss for NY State? Do I have to pay the state and how much?
Customer: replied 1 year ago.
Correction selling price $305,000.00. I forgot one zero.
Expert:  Barbara replied 1 year ago.

Just to confirm--

FMV of TOTAL property you inherited in 1989 with your sister is $220,700? If so, your basis would be 1/2 of the FMV at that time.

Your sister passes and you inherit the other half. Your basis for the 1/2 your inherit from your sister would be the FMV at that time.

As I previously mentioned, the percentage of the values for each sale will have to be calculated in order to determine capital gains, if any.

Customer: replied 1 year ago.
If I understand correctly I take the FMV of the land as of today and subtract what I am selling to get the gain/loss ?
Expert:  Barbara replied 1 year ago.

No. You pay capital gains on the difference between your basis and the selling price.

Your basis for the first 1/2 you inherited would be $110,350.

Your basis for the second 1/2 you inherited would be $119,750.

The percentage of the values for EACH SALE will have to be calculated. For example, what percentage of the property was the house and acreage? What percentage is the remaining acreage?

Expert:  Barbara replied 1 year ago.

Again, for example, the percentage of the acreage itself is:

8.5 acres = 17% of the total acreage of 495.5, but we need to add a percentage for the value of the house.

The basis for the sale of the house and 8.5 acres would be 17% plus the percentage for the value of the house. Just using 17% for the acreage would give you a gain of $19,883 BUT the percentage has to be increased for the house to accurately compute the calculation.

Customer: replied 1 year ago.
I don't know the % value of the house only that it was appraised at $52,000.
Expert:  Barbara replied 1 year ago.

So of the total basis of $230,100, the sale of the house and land would be 26% or $59,826. If the selling price is $59,000, your gain is $826. The capital gains tax would be based on the gain of $826. If you pay closing costs or real estate commission, the selling price is reduced by those amounts.

The remaining 487 acres would be 74%. If the selling price for the remaining acres is $305,000, your gain is the difference between $305,000 and $170,274 or $134,726. Again, if you pay closing costs or real estate commission, the selling price is reduced by those amounts.

The capital gains tax rate in NY is 31.5% on the gain.

Customer: replied 1 year ago.
The true value of the 487 ac according to the state is $477,000.00. I was only able to get 305,000. The assessment rate is based on 100% of the market value. So is my FMV $477,000 or $305,000?
Expert:  Barbara replied 1 year ago.

You previously said that the FMV (your stepped up basis because of inheritance) at the time of your sister's death was $239,500. When you calculate capital gains, the formula is selling price minus basis not FMV at time of sale.

Customer: replied 1 year ago.
How do you obtain the basis from the FMV.
Expert:  Barbara replied 1 year ago.

When you inherit property, your basis is the value (FMV) as of the date of death of the person your inherit from. It's called a stepped up basis.

I am leaving in a few minutes for several hours to tutor a student. If you have any additional questions, please them here, and I will respond when I return.

Customer: replied 1 year ago.
Where do I find the fair market value and the basis inheritance ? I guess I am asking do I owe NY a gain and if so what is the amount excluding closing costs.
Expert:  Barbara replied 1 year ago.

The stepped up basis is the FMV as of the date of death. As I previously advised, You said that the FMV (your stepped up basis because of inheritance) at the time of your sister's death was $239,500. When you calculate capital gains, the formula is selling price minus basis not FMV at time of sale.

It would seem you will owe capital gains tax in NY based on the total of the $826 and $134,726. If you have closing costs from either sale, that would reduce the amount on which you will pay capital gains tax.

Expert:  Barbara replied 1 year ago.

Just following up with you to see if you have any other questions or concerns. If so, please come back to me here at your convenience, and I will be happy to assist you. If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts Just Answer to compensate me for a portion of the fee you previously paid.

Best regards,

Barb