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glen34
New Member

Capital gains on sale of jointly held inherited land

I recently sold a lot held jointly husband and wife after my wife died which my wife inherited and had added me as a joint owner how to figure capital gains. what about step in cost basis?
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Accepted Solutions
Critter
Level 15

Capital gains on sale of jointly held inherited land

Simple math ... here is a what if amounts 

Fair Market Value on the day she inherited = her basis      $10,000

She adds you to the deed so you got 1/2 her basis as a gift   ... you each have $5000

she passes ... 1/2 the fair market value on the day of her death = your inherited basis  FMV = $20,000/2

your current basis = your inherited portion $10,000  + 1/2 original basis $5000 = $15,000

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6 Replies
Critter
Level 15

Capital gains on sale of jointly held inherited land

Simple math ... here is a what if amounts 

Fair Market Value on the day she inherited = her basis      $10,000

She adds you to the deed so you got 1/2 her basis as a gift   ... you each have $5000

she passes ... 1/2 the fair market value on the day of her death = your inherited basis  FMV = $20,000/2

your current basis = your inherited portion $10,000  + 1/2 original basis $5000 = $15,000

glen34
New Member

Capital gains on sale of jointly held inherited land

The tax assessment appraisal of a jointly held lot with spouse was $50k when she died. Two months later, lot was sold for $85k. Is my cost basis 1/2 of $50k or 1/2 of $85k?
Critter
Level 15

Capital gains on sale of jointly held inherited land

1/2 of $50
TaxGuyBill
Level 9

Capital gains on sale of jointly held inherited land

What State do you live in?

The tax assessment is usually not the actual Fair Market Value.  It is quite unlikely the lot increased in value by $35,000 (70%) in two months.  It may be a good idea to get an official appraisal.
glen34
New Member

Capital gains on sale of jointly held inherited land

But the lot sold for $85k— 35k more than the tax appraisal. It seems to me $85k is the true FMV and not what an appraiser thinks it’s worth.
TaxGuyBill
Level 9

Capital gains on sale of jointly held inherited land

I agree, $85,000 is more logical, which is why you may want to get an official appraisal.  Tax Appraisals are often based on valuations 1-2 years prior to the date of the tax statement.

Depending on what State you live in, the step-up in Basis may be different.
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