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Message
A question on inherited property capital gains
Posted on 4/27/15 at 10:54 am
Posted on 4/27/15 at 10:54 am
I inherited a piece of property from a family member. It is split equally amongst 3 people and while it generates an income I believe we three have agreed it in our best interest to sell.
As of now I have not paid any taxes other than we will be responsible for property tax. However, when sold do I pay tax on my portion of cash or is this still considered part of the inheritance?
And if so can I roll it into another piece of real estate to avoid the tax?
As of now I have not paid any taxes other than we will be responsible for property tax. However, when sold do I pay tax on my portion of cash or is this still considered part of the inheritance?
And if so can I roll it into another piece of real estate to avoid the tax?
4
Posted on 4/27/15 at 11:00 am to Shamalamadingdong
You will pay tax on the increase in value between the value at the time that you inherited it and sale price.
Yes but there are many rules you need to consider, and you have to declare by signing a form at closing of the relinquished property.
quote:
And if so can I roll it into another piece of real estate to avoid the tax?
Yes but there are many rules you need to consider, and you have to declare by signing a form at closing of the relinquished property.
Posted on 4/27/15 at 11:10 am to Shamalamadingdong
Not to get political on the Money Talk, but Jesus H....it really sucks we have to ask questions like this.
Posted on 4/27/15 at 11:12 am to Bear Is Dead
Good. Since it was just inherited and we say put it on the market in the next 8-12 months the value should basically be the same.
Posted on 4/27/15 at 11:16 am to DirtyMikeandtheBoys
quote:
Not to get political on the Money Talk, but Jesus H....it really sucks we have to ask questions like this.
Why because I don't know or because our tax code is off the rails?
Another question. I also have another piece of property from same inheritance however this one, same three people, was put into an LLC a year ago with the deceased having control until passed then it goes to the three of us. We have an operating agreement but no value was put on the property at the time of forming the LLC.
Same application as if we just inherited without being involved in an LLC?
Posted on 4/27/15 at 11:46 am to Shamalamadingdong
quote:
because our tax code is off the rails
Posted on 4/27/15 at 2:16 pm to Bear Is Dead
quote:
And if so can I roll it into another piece of real estate to avoid the tax?
Yes but there are many rules you need to consider, and you have to declare by signing a form at closing of the relinquished property.
This is a 1031 Exchange. It is not simply signing a form at the closing. The exchanger must designate a Qualified Intermediary. Also, you can not have constructive receipt of the proceeds during the exchange period.
Call Title Exchange Co. if you are interested in a 1031 and they can answer your questions.
Posted on 4/27/15 at 3:33 pm to NEWBIE
quote:
This is a 1031 Exchange. It is not simply signing a form at the closing. The exchanger must designate a Qualified Intermediary. Also, you can not have constructive receipt of the proceeds during the exchange period.
I knew there was a name for it just couldn't remember. I'll call them as I get closer. I will have my attorney putting it together but this is preliminary discussion.
So not constructive receipt it would be held in escrow?
Posted on 4/27/15 at 3:55 pm to Shamalamadingdong
It would be held in the exchange company's escrow/trust account.
Posted on 4/27/15 at 3:56 pm to NEWBIE
Time limit on making the exchange? 12 months or something like that?
ETA: From IRS-180 days. Interesting.
The first limit is that you have 45 days from the date you sell the relinquished property to identify potential replacement properties. The identification must be in writing, signed by you and delivered to a person involved in the exchange like the seller of the replacement property or the qualified intermediary. However, notice to your attorney, real estate agent, accountant or similar persons acting as your agent is not sufficient.
Replacement properties must be clearly described in the written identification. In the case of real estate, this means a legal description, street address or distinguishable name. Follow the IRS guidelines for the maximum number and value of properties that can be identified.
The second limit is that the replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. The replacement property received must be substantially the same as property identified within the 45-day limit described above.
ETA: From IRS-180 days. Interesting.
The first limit is that you have 45 days from the date you sell the relinquished property to identify potential replacement properties. The identification must be in writing, signed by you and delivered to a person involved in the exchange like the seller of the replacement property or the qualified intermediary. However, notice to your attorney, real estate agent, accountant or similar persons acting as your agent is not sufficient.
Replacement properties must be clearly described in the written identification. In the case of real estate, this means a legal description, street address or distinguishable name. Follow the IRS guidelines for the maximum number and value of properties that can be identified.
The second limit is that the replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. The replacement property received must be substantially the same as property identified within the 45-day limit described above.
This post was edited on 4/27/15 at 4:09 pm
Posted on 4/27/15 at 9:17 pm to Shamalamadingdong
You get the step up in basis on date of death unless you declared for the alt date value which I doubt you did. If the value has increased significantly then look to the 1031..if not, look at the PV of the cash you could get minus the taxes and come to a conclusion.
Consult a CPA
Consult a CPA
Posted on 4/28/15 at 8:26 am to Shamalamadingdong
What are you paying your attorney for? If you need to get advice from a message board, then your attorney isn't doing what you pay him to do. Your questions are routine questions the owners of real property have, and especially owners who inherited the real property. Maybe you should be asking if any posters know attorneys who could answer your questions, and assist you with your transactions more competently.
Posted on 4/28/15 at 9:33 am to Shamalamadingdong
quote:
As of now I have not paid any taxes other than we will be responsible for property tax.
Who's reporting the income and losses from the property?
Posted on 4/28/15 at 2:19 pm to Poodlebrain
quote:
What are you paying your attorney for? If you need to get advice from a message board, then your attorney isn't doing what you pay him to do. Your questions are routine questions the owners of real property have, and especially owners who inherited the real property. Maybe you should be asking if any posters know attorneys who could answer your questions, and assist you with your transactions more competently.
I haven't paid my attorney or my cpa. I haven't turned any documents over to anyone. The person just died 4 days ago and I'm just running through my check list because I know these will come up. I have very capable attorney's and a very capable accounting firm that I know will steer me in the right direction but when I'm sitting at my desk with nothing else to do and have a question it's easy to pop it on here.
But thank you for your concern.
Posted on 4/28/15 at 2:23 pm to LSUFanHouston
quote:
Who's reporting the income and losses from the property?
Up until last Friday-the dead guy.
Posted on 4/28/15 at 3:46 pm to Shamalamadingdong
quote:
Up until last Friday-the dead guy.
Ahhhhh.... i didn't realize it was so recent.
And sorry for your loss.
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