Tax Consequences & How to Sell an Inherited House Easily
Have you ever wondered if and how you can sell an inherited house easily? How to sell an inherited house easily can be a difficult task depending on the knowledge you have and if you are aware of the consequences. The reason for this is because of the tax consequences that come forth with selling an inherited house. Taxation of gains/losses are what can set you back further or push you forward. In this article, we will give you the reasons for tax consequences and how you avoid them to sell an inherited house easily.
Inheriting a house is already a hassle as enough as it is. If it is a loved one or even a roommate that was a friend, it can be hard to move forward with them passing. Not only do you have to move their belongings, but also you have the house and property to sell. The taxing situation when selling a house can be bothersome. Here are some factors below that you may have to look at it sell the house:
Calculation of Basis
One of the most crucial factors to remember doing with tax procedures is that following the inheritance of a home, is how the basis will be calculated. The basis calculated refers to the asset cost of the property. After someone passes away, the value or basis of the property will raise or go back to the current market value in the price. An example is; if the person bought the home 20 years ago for $25,000 and it now has the value of $100,000, your basis will be $100,000.
Taxation of Gains/Losses
What the taxation of gains/losses refer to is what you earn from selling the property. After the the passing of a loved one, you would now have to pay taxes on that profit after the property is inherited. However, after the calculation of basis, and if you sell it right away, you wouldn’t owe any capital gains taxes when the calculation basis is set back to the market value. But if you hold on to the property and sell it in year for $150,000, you will owe capital gains on $50,000 (the difference between sale value and the value it had when you inherited it). If you sell the property shortly after you inherit it for less than your current cost basis, say for $70,000, then you are eligible to claim a capital loss on your taxes.
Selling for a Loss
One of the questions you may have is; “why would anyone want to sell their home for less than the basis value?” In some instances, the person who inherited the house may experience the following below;
- May not live nearby.
- May not have the money to fix it up.
- May not want to put in the extensive time and effort required to oversee renovations contractors.
In these instances, it may seem like the best option to sell the house with less than the value as it is. If you run into any of these options above, call us and we can help you! National Cash will take the home off of your hands and save you the stress. You will not need to repair any fixes or any of that matter. Call us today to get cash in hand for the house that you have inherited.