It is an inheritance, and as such, your basis in the property is the Fair Market Value on the date of death. Divide the basis and sales price between any inheritors. If there is a gain, it is taxable. You can add closing costs to the basis to reduce the gain.
The
only deductible closing costs are those for interest, and deductible real
estate taxes. Other settlement fees and closing costs for buying the property
become additions to your basis in the property. These basis adjustments
include:
* Abstract fees,
* Charges for installing utility services,
* Legal fees,
* Recording fees,
* Surveys,
* Transfer taxes,
* Title insurance, and
* Any amounts the seller owes that you agree to pay, such as back taxes
or interest, recording or mortgage fees, charges for improvements or repairs,
and sales commissions.
