Capital Gains Sale Of House
December 14th, 2007
Question: do I have to pay Capital Gains Tax on sale of my mothers house after her death?
Answer: Hello,
At the time of your mothers death there was what is called a “deemed disposition” on her home. Assuming that it was her principal residence then there is no capital gain on the deemed disposition.
The deemed disposition results in a new Adjusted Cost Base on the house, equal to the Fair Market Value of the home at the time of the deemed disposition.
If the house was held in an estate or by the beneficiaries for any length of time it’s possible that the value of the home appreciated from the time of the deemed disposition to the time of the actual sale. In that case there would be capital gains on the sale and the associated taxes.
Generally speaking, if the house was sold within a coupld of months of the date of death then don’t worry about capital gains. If held for more then 6 months then you would need to determine an approximate Fair Market Value at the date of death and compare that to the final selling price. Usually you can get away with using the property tax assessment value plus 5% as the estimated Fair Market Value.
Hope that helps.
Citigroup Said to Plan Sale of $10 Billion Private-Equity Unit
Citigroup plans to sell or split off its $10 billion Citi Private Equity unit, expanding the list of money-management businesses the U.S. bank is disposing of to reduce debt
Posted in 
Tags: