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tax on the sale of property transfer eight years ago

Posted on: 20th Nov, 2008 12:43 pm
My parents tranfered their home to my sister eight years ago. My mother lived in the house at no charge until she died 18 months ago. The house has not been lived in since then. She has sold the property this month [nov. 2008]. She and her husband are both retired and earn less than $50,000 a year. Due to the falling housing market the value of the property has gone down from the time it was transfered to her. Is she liable for capital gain taxes?
Hi donrand!

Welcome to forums!

Capital gains tax rates are determined by the type of investment asset, the holding period and his or her tax bracket. The capital gains will also be subject to state income taxes however most states do not have separate capital gains tax. There's a new zero percent tax rate on long-term capital gains starting from 2008. The zero percent rates apply to people who are in the 10% and 15% marginal tax brackets. The short-term capital gains with a holding period of 1 year or less will have ordinary income tax rates up to 35%.

I think she will be liable for capital gains tax but its better to consult a tax consultant who will look after the various criteria and tell you the exact amount.

Feel free to ask if you have further queries.

Sussane
Posted on: 20th Nov, 2008 07:49 pm
Hi donrand!

You have mentioned that the property prices have fallen in the are where the property is located. In that case, if the property sells at a lower value, then there are chances that your sister does not need to pay any capital gains taxes.

Thanks,

Jerry
Posted on: 21st Nov, 2008 02:53 am
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