Inheriting a home is a bittersweet experience. At one end you are mourning the death of the loved one, but on the other extreme you are left with a property value that you can use to improve your life. At this point you tend to ask yourself, “What are the tax consequences when selling a house I inherited in Palm Beach Florida?” Let me assure you that tax laws have been designed in a way that will not put any burden on you upon inheriting the property. The good news is that financial consequences are less daunting than what you may have expected.
Tax Consequences When Selling a House I Inherited in Palm Beach Florida
Calculation of Basis
You must acquaint yourself with the calculation of basis in order to comprehend how you will be taxed in case you inherit a home. In this case, basis refers to the asset cost for the purpose of the calculation of capital gains along with other taxes. When your loved one dies, the basis of their property in Palm Beach is increased to the market value at their time of the death. For example, if a person has bought the property at $20,000 but on his death the market value is $100,000, then the property will be valued at the latter amount for the purpose of calculating capital gains.
Taxation of Gains/Losses
A capital gain or loss simply refers to what you will earn from selling a property that you use for either personal or investment purpose. A property can be anything from house to furniture. The sale is regarded as capital gain or loss for the purpose of income tax, if you decide to sell the property in Palm Beach. However, if you want to qualify for lower rates on long term capital gains, then you are required to hold the property for at least a year.
Reporting the Sale
When you sell the inherited house, you have to report this transaction for income tax purposes. To report the sale, you first need to calculate your capital gain or loss and this can be done by subtracting the basis from the sale amount. This amount should be reported to the necessary authorities.
Although, owning an inheriting property can be stressful since you have to take care of the new property and pay for its taxes at the same time but you can sell the property even in probate. You should go through the probate process in Palm Beach as the first step to sell your home. You will then be authorized by the court to proceed. In the case other individuals are involved in the inheritance, and then your first step should be to agree unanimously on selling. The next step is to sign the petition requesting the court to allow you to sell the property.
You are then required to consider how much tax you are required to pay. This tax will be paid on the capital gains or loss, resulting from the sale of the property. To undertake smooth and legitimate sale of your home, you can call Probate Solutions FL now at 561-370-8335. Since we are local here in Palm Beach Florida, we are better acquainted with the market situations than anyone else. If you are still not sure about the tax consequences when selling a house you inherited in Palm Beach, then we are here to discuss with you in more detail.
It is true that selling an inherited house can majorly relieve you from a great burden. Moreover, selling your property to an investor is quite simple and fast process. For further information on how to go about selling your home in Palm Beach, contact us and we will be glad to help you.
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