Deductions & credits

To determine your gain on the sale, you will find the cost basis of the property, which if you inherited it, would be  the Fair Market Value of the property on the date of your parents death, whichever died last.  

If this was a gift and not an inheritance, then the your cost basis would be either their adjusted basis or the FMV at the time they gave you the house depending on whether you have a gain or loss on the sale. 

• Your adjusted basis for figuring a gain is the donor's adjusted basis just before the donor made the gift, increased or decreased by any required adjustments to basis while you held the property.
• Your adjusted basis for figuring a loss is the FMV of the property at the time the donor made the gift, increased or decreased by any required adjustments to basis while you held the property.
• Note: If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither a gain nor loss on the sale or disposition of the property.  What is the basis of property received as a gift?

The rest of your income will play a part in the tax rate. However, your tax rate on the sale of the their home would be between 0% and 20%. The  Capital Gains rates are as follows based on income

• Zero percent rate for the following income
  • $47,025 for single or MFS
  • $63,000 for HOH
  • $94,050 for Married Filing Jointly
• Fifteen percent for income more than above but less than below
  • $291,850 for MFS
  • $518,900 for Single
  • $551,350 for Head of Household
  • $583,750 for Married Filing Jointly
• Twenty percent for the amount that your taxable income is over the 15% level