My parents purchased a condo in 2003 for $30,000
I inherited the property in 2014 and it has been used as rental property the entire time.
My attorney placed a county assessed value of $40,000 when he recorded the deed.
When I did my taxes in 2004 I used this value when asked What was the total cost of the property.
In reviewing IRS.GOV it stated the "step up value" at the time of inheritance should be the fair market value of the property to sell and not the county assessed Value.
The FMV of this property should have been $60,000 at time of inheritance based on my review of sales of units from this condo complex. I plan to sell the condo at $70,000
I did a mock up tax return from my 2017 return to determine what the capital gains tax will be as an estimate. It appears that turbo tax is using the $40,000 assessed value as the basis for the calculating the capital gains tax.
Q1: Is the capital gain tax the difference of the FMV selling price at time of inheritance and compared to present FMV sale price? And will Turbo Tax ask me to complete a form to reflect this or will it use the $40,000 county assessed value that is plugged into turbo tax since 2004 that is used for depreciation and income and deductions?
Q2: If the county assessed value is used by turbo tax (since i have filed my taxes for all years with turbo tax) Can this value be updated to reflect the $60,000 step up FMV sale price
I'm trying to be prepared for 2018 income taxes 🙂
Thanks in advance for your responses !!!
