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Returning Member

Real estate property

I inherited a piece of property 45 years ago, vacant land, landlocked. I am about to sell it. Do I have to pay taxes on it since I paid taxes when inherited?

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Level 15

Real estate property

You will most likely have to pay federal income tax (and possibly state income tax) at the capital gains tax rate on the difference between your basis in the property and the selling price (less expenses).

 

Your basis should be the fair market value as of the date of death of the decedent plus any improvements subsequently made to the property (which would be unusual for vacant land). 

 

Inheritance and estate taxes are in a different realm than federal and state income taxes. You might want to consult with a tax professional prior to making any decisions with respect to this transaction.

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