Posted on: 19th Jun, 2007 01:57 pm
:? Several years ago, my grandmother quit claimed her property to my mother (her daughter). My grandmother has recently died and I am assuming my mother is the sole owner of the aforesaid property. She has no interest in moving into the property and plans to sell it as soon as possible. What will be her most probable tax consequences? If she is liable for capital gain taxes, how will her basis be computed? Concerned
Hi Guest,
Welcome to Mortgagefit forum.
The rules are that there would be no tax consequences (which means not owe any capital gains taxes) on profit made from sale of the house if the profit made does not exceed $250,000.
But few conditions are to be met such as the house which is being sold should be owner's primary residence and the owner is required to live in the house for 2 years out of the last 5 years before the house is sold.
Colin
Welcome to Mortgagefit forum.
The rules are that there would be no tax consequences (which means not owe any capital gains taxes) on profit made from sale of the house if the profit made does not exceed $250,000.
But few conditions are to be met such as the house which is being sold should be owner's primary residence and the owner is required to live in the house for 2 years out of the last 5 years before the house is sold.
Colin
At the time of sale to know if any gain or loss is made you will have to know the basis.
Basis is determined by how the owner got his home. Basis is its cost if the owner buys or builds it. While if the house is received in some other way such as by gift or inheritance then basis is either it's FMV (Fair Market Value) when owner gets it or adjusted basis for the person from whom the house is received.
Adjusted basis calculated by taking into consideration the adjustments which are made on the house which increase or decrease its value.
Basis is determined by how the owner got his home. Basis is its cost if the owner buys or builds it. While if the house is received in some other way such as by gift or inheritance then basis is either it's FMV (Fair Market Value) when owner gets it or adjusted basis for the person from whom the house is received.
Adjusted basis calculated by taking into consideration the adjustments which are made on the house which increase or decrease its value.
all the explanations can be availed from here about selling the home and tax consequences:
irs.gov / publications / p523 / ar02.html
irs.gov / publications / p523 / ar02.html
Hello guest,
Your mother is eligible for the capital gain tax if and only if the profit gained after selling the house exceeds beyond the limit as mentioned by Colin.
Your mother is eligible for the capital gain tax if and only if the profit gained after selling the house exceeds beyond the limit as mentioned by Colin.