Will I need to pay taxes on the sale of the home that was willed to me?
1 answer
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Last updated: Sep 28, 2011
Q
I was recently willed a home. It is being sold as part of the estate. I was sent a 1099-s form by the lawyer handling the sale. I have my own home. Will I need to pay taxes on the sale of the home that was willed to me?
A
Barbara Steinberg is the CEO and founder of BLS Eldercare Financial Solutions, which specializes in helping families pay for long-term care for their...
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The original cost basis of the home is the price the owner paid for it. If you inherit the home, you receive a “step-up in basis”. This means the cost basis of the home to you is its fair market value at the date of death. For example, if the home was originally bought for $20,000, that is its cost basis. Let’s assume that the home is worth $200,000 at the time of the owner’s death. Your cost basis is $200,000. If you turn around and sell the house for $200,000, you will not owe any capital gains tax because the difference between the selling price and your cost basis is zero. Since you received a 1099-s, the house has been sold. When you file your annual income taxes, you will include the 1099-s and it will be offset by your cost basis.
