Inheriting a home is a pretty sweet experience, and yet it can be bitter at the same time… You are left with great property value you can use to improve your life, even though you are still mourning the loss of the loved one who left this world along with their possessions. So, you may tend to ask yourself at this point “what are the consequences when selling a house that I inherited in Paducah and Surrounding Areas KY?” In Kentucky, when ownership of a property is transferred, an excise tax of $.50 for each $500 of value or fraction thereof is levied on the value of the property. But one that we will deal with is taxes. Groan, that dreaded word. But don’t fret the tax laws have been designed in a way that they will not add any more burden to you upon inheriting the property. This implies that the financial consequences are less daunting than what you would expect, which of course is good news for you. 🙂
Tax Consequences when selling a house I inherited in Paducah and Surrounding Areas, KY
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a home; you need to know how the basis is calculated. What is basis? Well, basis, in this case, the amount your property is worth for tax purposes and 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 Paducah and Surrounding Areas 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 are the money you make or lose when you sell property that you either use for yourself or as an investment. Such can be houses, furniture and many more things. If you decide to sell an inherited home in Paducah and Surrounding Areas, that sale is regarded as capital gain or loss for the purpose of income tax. In most situations, in order to get lower rates on long-term capital gains, you need to have owned that property for at least one year. However long the duration you have been in ownership of an inherited home, unfortunately any gain or loss will still be treated as long-term.
Reporting the sale
When you sell a home that you’ve inherited, you need to let the tax authorities know about it for income tax purposes. In order to do this, you should start by figuring out your capital gain or loss. This is done by subtracting the original cost (basis) from the amount you sold the home for. Afterward, you should report this calculated amount to the appropriate government agencies.
Having an inherited home can be stressing given the fact that you have new property to take care of and another one to pay taxes for at the same time… You should go through the probate process in Paducah and Surrounding Areas as the first step to selling your home which we went over in another session of this newsletter. If there are any other individuals involved in the inheritance, you must first contact them and get them to be in agreement with everyone else on the decision. As long as everyone agrees you can then file a petition requesting the court to allow you to sell the property. The court will then authorize you to proceed as you wish.
Next thing you must think about is how much tax you’re going to have to pay. This tax is one that will be based on the capital gains or losses that happened when you sold the house. You can call Clayton Buys Houses now at (270) 551-2171 to undertake a smooth and legitimate sale of your home and we don’t charge a fee or commission like some companies do. We are local here in Paducah and Surrounding Areas KY and we know the market here better than anyone else because we’re from here. If all this still has you asking yourself “What the tax consequences are when selling a house that you inherited in Paducah and Surrounding Areas“, then we would be more than happy to discuss it with you in more detail if you’ll just contact us here or give us a call (270) 551-2171.
Selling an inherited house can relieve you of quite a burden. In addition to that, 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 Paducah and Surrounding Areas and we will be glad to help you.