“Hi Gary. I inherited a property from my father in March 2008. I’d like to sell now. But to get the tax break, I can’t sell until next March so that I’ll have lived here two years…”
Answer:
Let me stop you right there…
You’re referring to the homeseller exclusion. If you’ve owned and lived in the home for at least 2 of the past 5 years, singles can exclude and pay no income tax on 250K of gain. Couples can exclude 500K.
However:
Most (or all?) of my clients who inherited a home got what is called “stepped up basis”.
This means in determining your gain, the IRS treats it like you bought the home for the value on the date the person passed away. This is in contrast to the IRS treating it as though you got the home for nothing and taxing you on the entire amount.
Bottom line is you probably will have little or no taxes to pay.
DISCLAIMER: I know enough about taxes to be dangerous and am NOT a tax expert. Please see a tax professional. If you don’t know one, call me and I’ll refer you to someone I know and trust.
