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My mother executed a deed adding my name in addition to herself as owner to the family home. She died ten years later July 2007. The house was vacant for two years, at the end of which I fixed the property and rented it. In calculating basis, what is the difference between gifted property and inherited property? Was this house gifted or inherited? Do I use FMV at the time my mother died or at the time I put the property in use? Location: CA.

jerry · Posted: Mon Apr 12, 2010 2:59 am Post subject:

Hi Guest,

You did not inherit the property, your mother gifted it to you. If you had received the property after your mother's death you would have inherited the property. But since you mother added you to the title, you became a legal owner of it even before your died. Thus, it should be considered as a gifted property rather than an inherited property.

The fair market value (FMV) of the property at the time it was transferred to you, will be considered as your basis for the calculation of taxes. For instance, if the FMV of the property when your mother added you to the title was say $50k, your cost basis in the property would also be $50k. Even if the property appreciated in value and was worth $80k, your cost basis would be $50k.

Thanks,

Jerry

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Calculating FMV of property gifted/inherited

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