Did you just inherit a home?
Well, paying taxes on an inherited property can be a little bit tricky.
For example, do you still get up to a $250,000 tax credit? Can a capital loss be deducted if the home sells for less than market value?
It’s probably a little overwhelming.
But not to worry, we’ve worked with lots of people in Janesville who were in the same position… and here are a few things that you should probably be aware of.
There’s No Home Sale Tax Exclusion — Typically, a seller would be able to deduct up to $250,000 in taxes on the sale of their home. But that’s only on a primary residence. So it only applies to an inherited home if you live in it and use it as your primary residence for two years.
You’ll Benefit From Stepped-Up Basis Rules — The good news is that “stepped-up basis” rules consider the home’s value as being its fair market value at the time of the owner’s death. This is almost always a higher number, which can work in your favor tax-wise if the property is sold (because if you sell for less than the stepped-up basis, you’ll have taken a “loss”).
You Can Deduct Up To $3,000 Per Year For Losses — Any loss that is taken on the sale of your inherited property can be deducted from your taxes (a “loss” is when the property is sold for less than its fair market value). But you can only deduct up to $3,000 per year.
How To Sell Quickly, As-Is For Cash — Want to sell your inherited home quickly, as-is for cash? At Stillwater Properties, we buy properties just like yours and we can even close in as little as two weeks and we’ll pay all closing costs. Give us a call at (608) 523-9807 to learn more!