- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Deductions & credits
You are selling your remainder interest and realizing a gain. So it's taxable. The fact that the sale is not necessarily voluntary on your part doesn't mean you don't owe taxes. (If if you had realized your inheritance in 2016, and paid no tax, you presumably would have invested or spent the money in the intervening 6 years and that would have led to a different kind of taxes being paid.)
The gain on your remainder interest depends on the fair market value of the property when your mother died. You can use any valuation you like, the question is, will it hold up if audited? Remember that in an audit, you are automatically wrong and the IRS is automatically right unless you can prove otherwise. A written valuation from a professional with local expertise would be better than a web site, and a professional appraisal would be better than an estimate. An appraiser can write a retroactive appraisal based on historical records.
You owe federal capital gains tax on your gain. You report and pay tax on all your world-wide income to your state of residence. Most states don't have special capital gains rates so the gain will be taxed as ordinary income. Most of the time, you also owe tax to the state where the property is located on a non-resident state income tax return (your home state gives you an offsetting credit for taxes paid in another state). But Florida has no personal income tax, so you will only pay tax in Maryland.
Note that with a gain of nearly $100K, you will likely be required to make estimated payments to the IRS and your state. Depending on your income, 15% or 20% to the IRS and 6% to Maryland. If the house closes in August, the estimated payment is due Sept 15, and if the closing is in September or later, the estimated payment is due January 15. If an estimated payment is required and you don't make it, you can be assessed an underpayment penalty even if you pay in full when you file your tax return.