Inheriting a home can be filled with mixed emotions. You’ve gained a valuable asset that potentially can improve your life or the lives of your family, but you are still mourning the loss of a loved one. And there’s another issue to confront: “What are the tax consequences when selling a house I inherited in Fairfax Virginia?” The tax laws actually have been designed to relieve you of the burden of inheriting the property. The financial consequences may be less daunting than what you would expect, which is good news for you. 🙂
Tax Consequences When Selling a House I Inherited in Fairfax Virginia
Calculation of basis
To understand how you’ll be taxed on your inherited a home, you need to know how basis is calculated. Basis 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 Fairfax is increased to the market value as at the time of death. For instance, if a person purchased a home 20 years ago for $125,000 but it was worth $400,000 at the time of death, that property would be valued at $400,000 for the purpose of calculating capital gains.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. This can include houses, furniture, and many more things. If you decide to sell an inherited home in Fairfax, that sale is regarded as capital gain (or loss) for the purpose of income tax. In most cases, for you to qualify for lower rates of long-term capital gains, you must have held that property for at least a year. But with inherited property, any gain or loss will be treated as long-term. This will help reduce the tax consequences when selling your inherited house.
Reporting the sale
When you sell an inherited home, you have to report it for the income tax purposes. You should first calculate your capital gain or loss. This is done by subtracting the basis from the sale amount. You then report that amount to the necessary authorities. Be sure to work with an accountant to make sure you’re not paying anything in taxes that you don’t have to.
Having an inherited home can be stressing. You now have a “new” property to take care of and pay taxes on. If it’s necessary, you should go through the probate process in Fairfax as the first step to selling your home. The court will then authorize you to proceed as you wish. If there are any other individuals involved in the inheritance–often children of the deceased–you should agree on selling and the approximate amount of the sale.. You can then file a petition requesting the court to allow you to sell the property.
Call Solutions 3D LLC now at 703-239-4212 to begin a smooth sale of your home. We are local here in Fairfax Virginia and we know the market. An accountant is your best source to help minimize the tax consequences when selling a house you inherited. We would be glad to work with your accountant to help you minimize the tax consequences when selling a house you inherited in Fairfax.
Selling an inherited house can relieve you of a major burden. As investors, we can make that process quick and easy. We’ll buy for all cash in as-is condition. Contact us for information on how to go about things when selling your home in Fairfax and we will be glad to help you.