@fanfare wrote:
"A dying family member transferred the deed to their house to me"
determine for your records the fair market value when this happened.
This adds a complication and an opportunity.
If there was a "life estate" (written down or implied by the circumstances) then the price you will use to determine your capital gains when you sell is the fair market value on the date of the previous owner's death, rather than the previous owner's original cost. I can't tell if you have an implied life estate, you would have to consult with an attorney. But, it would be a good idea to get a real estate professional to prepare an official appraisal. It will cost money now but could save you a considerable amount of taxes in the future.
**To simplify, a life estate means the person gives you the house on the condition that they can stay in the house until they die and you can't sell or force them out. In this case, whenever you sell the house, you are taxed as if you inherited the house instead of were given the house. So you need to know the market value when the previous owned died to pay the lowest tax, if and when you sell.
A life estate can be written in the deed, or it can be implied by the circumstances. But you may want legal advice on how to document those circumstances.
