You have an inherited house that you need to sell. How will the sale of the house impact you financially? Yes the proceeds of the sale will most likely be an asset but what about taxes? Will you need to pay taxes on the proceeds?
For tax purposes, the sale of an inherited house is treated differently from the sale of your primary residence. When you sell a house that you have occupied for at least two of the previous five years, you have a tax exclusion. If you are single, that amount is $250,000 and $500,000 if you are married.
An inherited house does not qualify for the home sale tax exclusion. The exception would be if you choose to live in the house for at least 2 years prior to selling it. It would be wise to consult a tax professional on what will be most beneficial for you.
If you are the recipient of an inherited house you should first determine the value of the property at the time of the deceased owner’s death. This valuation is important even if you are not planning on selling the house immediately. Why is this important? Recipients of an inherited house will pay capital gains tax only on the increase in value of the house since the time of the decedent’s death.
If the house was worth $400,00 at the time of death but increased to $410,000 upon sale of the house, the heir(s) will pay taxes on $10,000. This IRS website has additional information. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances
Determining the fair market value of a house that is included in an estate is an important duty of the executor or administrator of an estate. You will need an experienced real estate agent who is qualified to give you the assistance you will need to ensure that you carry out your fiduciary duties effectively during this very emotional time. If the estate will be going through the probate process, the court will require accurate information in a timely manner. This will require attention to details and to timelines. A simple mis-step can set the process back months.
Check out the probate timeline here:
http://www.newyorkprobatehomesales.com
Certified Probate Real Estate Specialists (C.P.R.E.S.) are licensed real estate agents with a specialization in probate real estate sales. Call 631-357-4819 to speak confidentially with a New York agent with this advanced certification.
