Have a Tax Question? Ask a Tax Expert
You were told correctly. The gain (difference in cost plus improvements and sale less costs to sell) will be taxed as a capital gain.
You will need to look back at the tax records for the value when the property was inherited. You can contact a real estate professional and see if they have records from back then (with the internet research can be used).
If you do not get the fair market value on the date of death you will have to use $0.
That would mean you pay tax on the entire $100,000.
I hate to have to tell you that but the IRS requires the basis.
Respond below please.
Willard, you stated "I can find no cost basis of what the property was worth at the time of inheritance ", where have you tried to find this info?
I looked into the USDA resources (I know USDA finances many loans in Texas) for past land values.
You can see their 1993 info here
Most land that was not improved was at $700 an acre.
Let me know if that link above worked for you.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.Rating lets Just Answer know you were assisted and credits me for my time.