Inheriting a house can be a sweet experience, yet bitter all the same. You are left with property value that you can use to improve your life, but you are still mourning the loss of a loved one. At this point, you may be asking yourself, “what are the tax consequences when selling a house I inherited in Austin, TX?” Tax laws were created in a way that will not give you additional stress upon inheriting the property. This is good news for you, because it means that the financial consequences are not as daunting as what would be expected. 🙂
Tax Consequences when selling a house I inherited in Austin, TX
Calculation of basis
To understand how you’ll be taxed after inheriting a home, you need to learn how basis is calculated. In this case, basis refers to the cost of the asset for figuring out the capital gains along with other taxes. When someone dies, the value or basis of their property in Austin is increased to the market value at the time of their death. For example, if a person bought a house 20 years ago for $25,000 but is worth $100,000 at the time of their death, that property would be valued at $100,000 in order to calculate capital gains.
Taxation of gains/losses
Capital gains or losses refer to amount you receive from selling property that you use for personal or investment reasons. This can include houses, furniture, and the like. If you sell a home that you inherited in Austin, the sale is viewed as capital gain or loss for income tax purposes. To qualify for lower rates of long-term capital gains, it is usually mandatory for you to have held that property for at least one year. Any gain or loss will still be treated as long-term, no matter how long you have owned the inherited home.
Reporting the sale
Once you have sold an inherited home, you must report it for income tax purposes. First, calculate your capital gain or loss. You can do this by subtracting the basis from the sale amount. You should then take that amount and report it to the required authorities.
Inheriting a home can be stressful given the fact that you have to maintain it and pay taxes for a new property. As the first step to selling your home, you should go through the probate process in Austin. After that process, the court will give you permission to move forward as you wish. If there are other individuals involved in the inheritance, agree with one another on that decision first. You can then file a petition requesting that the court allows you to sell the property.
Next, consider how much tax you are to pay. This will be paid against the capital gains or losses resulting from the sale of the house. Call Austin Direct Home Buyers now at (512) 345-9090 to start the process of a smooth and legitimate sale of your house. We are local to Austin TX and we know the market here better than anyone else. If you are still wondering what the tax consequences when selling a house I inherited in Austin are, then we would be happy to discuss it with you in detail.
Selling an inherited house can relieve you of quite a burden. In addition to that, selling the property to an investor is a simple and quick process. Contact us for inquiries on how to move forward when selling your home in Austin and we will be glad to help you.