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If i own a house, fully paid for, and i rent it out, and…

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If i own a...

If i own a house, fully paid for, and i rent it out, and then i die, what are the tax implications? capital gains tax etc

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I live in california

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If the house was purchased for 13,000 and it's now worth 2 million

Submitted: 3 months ago.Category: Tax
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3/19/2018
Tax Professional: Tax.appeal.168, Tax Accountant replied 3 months ago
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Tax Professional: Tax.appeal.168, Tax Accountant replied 3 months ago

Capital gains tax comes into play when the property is sold, not when a person dies. If you die, the house will be a part of your estate or pass on to a beneficiary if that is how you have it set up. Now if the beneficiary sells the house and they incur capital gains, which is unlikely because of the stepped up basis, they will be required to pay capital gains tax on the sale.

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Customer reply replied 3 months ago
then if i die, and i'm not living in the house at the time, no capital gains tax? but what about inheritance tax consequence for the people in my living trust?
Customer reply replied 3 months ago
i should say, if i die and my beneficiaries sell the house (that is rented at the time of my death), what is the percentage rate on inheritance tax for my beneficiaries?
Customer reply replied 3 months ago
or capital gains tax for my beneficiaries, if they sell the house?
Tax Professional: Tax.appeal.168, Tax Accountant replied 3 months ago

If your beneficiaries sell the property, again the stepped up basis comes into play. The stepped up basis means that the cost basis of the property will be the FMV on the date of your death.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 3 months ago

You may want to refer to the information at the following link. It will provide more details regarding how the stepped up basis works.

https://ttlc.intuit.com/questions/2351616-is-the-money-received-from-the-sale-of-inherited-property-taxable

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