Inheriting a house is a pretty cool experience and oppurtunity, yet bitter at the same time… You are left with a potentnally great property value you can use to improve your life, but you are still mourning the loss of a loved one. So you may be wondering at this point “what are the tax consequences when selling a real estate property I inherited in Boston MA?” 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 Boston MA
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a house, 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 Boston is increased to the market value as 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. Such can be houses ( real estate), furniture and many more things. If you decide to sell an inherited house in Boston, 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 house, any gain or loss will still be treated as long-term.
Reporting the sale
Upon selling an inherited property, you have to report it for the income tax purposes. 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 house can be stressing given the fact that you have new house to take care of and pay taxes for it at the same time… You should go through the probate process in Boston 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 house.
You should then consider how much tax you are to pay. This will be paid against the capital gains or losses resulting from the sale of the property. You can call Layne Real Estate Investments, LLC now at (508) 857-9990 to undertake a smooth and legitimate sale of your house. We are local here in Boston MA and we know the market here better than anyone else. If you are still asking yourself what are the tax consequences when selling a house I inherited in Boston, then we would be happy to discuss it with you in more detail.
Selling an inherited home can relieve you of the stress that comes with it. In addition to that, selling the house to an investor is a basic simple and quick process. Contact us for inquiries on how to go about things when selling your house in Boston and we will be glad to help you.