I Sold Something I Inherited

Generally, if you inherit property, you receive a tax basis that is equal to the property's value at the date of death (or six months later, if the executor elected the alternate valuation date).

When you sell property that had been inherited, you recognize gain or loss based on the variation from the tax basis.

For example: You inherited land from Uncle Frank, which he purchased for $1,000 but was worth $8,000 at his death. You sell the land for $8,100, less $500 in commissions and other costs of sale. Your net selling price is $8,100 - 500 = $7,600. Your tax basis is the estate valuation of $8,000. You have a loss of $400 on the sale. (Note: If Uncle Frank had paid $10,000 for the land, your sale would still result in the same $400 loss. What he paid for the property is not relevant if it passes to you upon his death.)

Under the tax law as it stands now, any gain or loss would be considered as a gain or loss from an asset held for more than twelve months but not more than eighteen months. This means that any gain would be taxed at a rate not to exceed 28%. However, there is a proposed law that will treat such gains or losses as being from assets held for more than eighteen months, meaning that gains would be taxed at either a 10% or 20% rate, depending on your tax bracket.



(c) Copyright 1995-2015 by TaxLogic