What are the tax implications of a sibling buyout…

[jeanettemcmurtry]

Simple question on this topic...

If I sell my share of an inherited property to a sister at half the FMV established by an appraisal, what do I need to plan to pay for capital gains taxes, if anything?  It sold at FMV or below the appraised FMV?

Since its an inherited property, do any taxes apply?

Thank you.

[MelanieCPA]

Hi @jeanettemcmurtry ,

You should view this as two transactions.  

1. You received property through an inheritance.  The receipt of the inherited property is generally not taxable unless it is from a tax free source.  The cost basis of this property is now the fair market value on the date of death.  
2. If you then decide to sell the property to your sister, you would report the sale, including the proceeds you received and the cost basis (see #1 above), of the property, on Schedule D of your tax return as the sale of personal property.  Only a gain would be taxable as personal property; personal losses are not deductible.

Here is a good IRS link as to the sale of inherited property:

Sale of Inherited Property 

Thank you for joining us today!