My mom passed in 2008 granting a life estate to her second husband at the time (not my father who was her first marriage). The house (Washington State) was deeded to myself and my siblings. My step father just passed after 18 years in residence. We are going to sell the house quickly. My question is in regards to taxes. I thought the house would step up in basis to value at time of my mom's death. If we sell now, the capital gains taxes would be based on difference in today's value and 2008 value (FMV). It does seem strange that we would have to pay capital gains on an asset we did not control nor could get income on for the past 18 years. So my questions are as follows:
1) Is the capital gains based on 2008 FMV or possibly on Life Tennant passing since we did not have control of asset?
2) If it is based on 2008 FMV, what is the best way to determine that value. I have the property tax estimate as well as a real estate comp. that I had completed in 2008. What is typically best method?
Thanks
Glenn
