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ljet1015
New Member

Inherited home I lived in for 12 years, sold 6 months after...Capital Gains?

My husband and I moved in with my grams 12 years ago to help her after some medical issues. It was only supposed to be temp, but she fell ill and we stayed until her passing last September. She left us the house (manufactured home) in her trust. We paid sales taxes when we transferred the title, around $3000 and sold the house 6 months later. We put a ton of work into it and ended up selling for 20k more than it was worth when we got it. 

 

Will we have to pay CG taxes on that 20k? This house was our permenant residence, according to IRS also. BUT we only technically owned it for 6mo. Also, its a manufactured home and only was a matter of paying sales tax and transfer of title. I can't find accurate info and while I do plan on discussing with an accountant, I thought I would ask here and get an idea of what to expect. Some articles say we had to live in home AND own to be excluded, some say just lived in. Ugh. So confusing! Guess we arent doing our own taxes this year 😕

2 Replies
tagteam
Level 15

Inherited home I lived in for 12 years, sold 6 months after...Capital Gains?


@ljet1015 wrote:

We put a ton of work into it and ended up selling for 20k more than it was worth when we got it. 


You may not qualify for the Section 121 (home sale) exclusion but you can certainly add any and all improvements made to your basis (which is the fair market value on the date of death of your grandmother). 

 

Are you certain you still have a $20k gain after adding the cost of improvements to your basis?

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Anonymous
Not applicable

Inherited home I lived in for 12 years, sold 6 months after...Capital Gains?

to get the home sales exclusion you would have had to lived in and owned the house for 2 out of 5 years before sale.  you only owned it 6 months.    you say you sold it for 20K more than it was worth.    what about selling costs such as title charges, other transfer taxes.  these would reduce your gain.     since you inherited the property, the sale would result in long term gain.   you will have to tell TT that you acquired it by inheritance .      for long term capital gains , depending on your other income,  there is a 0% tax bracket so you might end up paying no federal tax on the gain.   state taxes, if any, will be different.   

 

the title fees you paid would be part of your basis. as well as any improvement costs made after she died,   

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