'What is the best way to sell the house to avoid capital gains or taxes? Is there a specific timeline that governs this?'
Here’s the background: My father died without a will. Now, my brother and I inherited my father’s house in New York, which is worth between $375,000 and $450,000. I am also a resident of New York, while my brother resides in Oregon. Our father passed September 2020. The lawyer who is managing the estate advised we can now sell the house. I have started to clean it out and doing some heavy lifting work such as cutting down trees, painting and refinishing the floors.
Dear Issues, I’m sorry to hear of your father’s passing, and I can imagine how difficult it has been for you to deal with not only his recent passing but also the messiness that occurs when a loved one dies without a will. This happens more often than you’d think, and even iconic figures like Aretha Franklin have died intestate, leaving their heirs to wade through the murkiness of probate court.
“ With inherited property, the cost basis for the home is based on its value at the person’s death and not when it was originally purchased. ” There are a handful of ways you can reduce the tax liability for the property. For starters, keep track of any costs incurred in getting the home into a sellable state. The costs of paint, floor wax, carpentry or plumbing can all be deducted from the capital gain.
To qualify for this exclusion, you must have lived in the home for two of the last five years. Given that you and your brother both inherited the home though, this could introduce more complication into the proceedings and other legal ramifications that might not make it worthwhile to pursue.
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