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Estate capital gains tax rate for 61, single, unable to

work, is claimed as a...
estate capital gains tax rate for 61, single, unable to work, is claimed as a dependent form sister,only income collects $500 month stipend from gov., which pays for health insurance and meds. is getting $125,000 from sale of house of brother who passed away.
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Answered in 10 minutes by:
10/1/2017
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,977
Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.

It depends. When did you inherit the house? When did you sell it? Who was on the title at the time of his death?

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Customer reply replied 10 months ago
John single passed away june 30. He made Joe his brother exector of his will and sole beneficiary Because he is unable to work. That money is to be used to pay his living expense to whomever takes car of him. Total gain from house is $168,000
Customer reply replied 10 months ago
Also, Joe is living with sister and has never lived at that address.

Ok. How the proceeds will be used does not affect the capital gains calculation. What 168K? Selling price?

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If he inherited the house by the end of June and sold in September he is not going to have any capital gains unless the house was located in a very hot real estate market and the value of the house increased by significantly in the last 6 weeks or so.

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Customer reply replied 10 months ago
house sold for $490, 000- $298,000 - 6% agents fee = $162,000
Customer reply replied 10 months ago
is sale of primary home of someone who passes away not taxed?

Not necessarily. What is 298K?

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Customer reply replied 10 months ago
$298K mortgage balance
Customer reply replied 10 months ago
they did sell it under FMV and have paid to clean and show the house.
Customer reply replied 10 months ago
had to pay mortgage on it until it sold

You cannot deduct the mortgage balance to figure out the capital gains. You did not claim the mortgage as income when you got it so you cannot deduct it when you repay it. You cannot deduct repayment of borrowed money.

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You will calculate the capital gains as followed.

Sales price

- basis (fair market value of the house on day of inheritance - when the original owner passed away)

- any capital improvement (after you inherited it)

- expenses of sale

= capital gains.

Since he did not use the house as his primary residence he will not qualify for the principle residence capital gains exclusion but if he sold the house within 8 week of inheriting it, he should not have any capital. A property value generally does not increase a lot in 8 weeks.

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Customer reply replied 10 months ago
thank you

You're welcome. Is there anything else I can help you with today?

emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,977
Experience: IRS licensed Enrolled Agent and tax instructor
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