Inheriting a home can be a tumultuous experience. You are left with great property value you can use to improve your life, but you are still mourning the loss of a loved one. You may want to know what the tax consequences of selling an inherited house in Austin TX are. The tax laws have been designed in a way they will not add any more burden unto you upon inheriting the property. This implies that the financial consequences are less daunting than what you would expect, which is good news for you.
Tax Consequences when selling a house I inherited in Austin TX
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a home, you need to know how basis is calculated. Basis, in this case, refers to the asset cost for purpose of the calculation of capital gains along other taxes. When a person dies, the value or basis of their property in Austin is increased to the market value at the time of their death. For instance, if a person purchased a home 20 years ago for $25,000 but it was worth $100,000 at the time of their death, that property would be valued at the latter amount for the purpose of calculating capital gains.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. This can be things like houses and furniture, among other things. If you decide to sell an inherited home in Austin, that sale is regarded as capital gain or loss for the purpose of income tax. In most cases, for you to qualify for lower rates of long-term capital gains, you are required to have held that property for at least a year. However long the duration you have been in ownership of an inherited home, any gain or loss will still be treated as long-term.
Reporting the sale
When you sell an inherited home, you have to report it for income tax purposes. Before reporting, you should first calculate your capital gain or loss. This is done by subtracting the basis from the sale amount. You should then report that amount to the necessary authorities.
Having an inherited home can be stressful given the fact that you have new property to take care of and pay taxes for it at the same time. You should go through the probate process in Austin as the first step to selling your home. The court will then authorize you to proceed as you wish. If there are any other individuals involved in the inheritance, you should first agree with each other on that decision. You can then file a petition requesting the court to allow you to sell the property.
Consider how much tax you are obligated to pay. This will be paid against the capital gains or losses resulting from the sale of the house. You can call Austin Wholesale Property now at (512) 318-2433 to help navigate a smooth and legitimate sale of your home. We are local in Austin TX and we know the market better than anyone else. If you are still wondering about tax consequences when selling an inherited house in Austin, we would be happy to discuss it with you in more detail.
Selling an inherited house can relieve you of quite a burden. In addition, selling the property to an investor is a basic simple and fast process. Contact us for inquiries on how to go about things when selling your home in Austin and we will be glad to help you.