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CapeRita
New Member

Capital Gains on Sale of inherited rental property

I'm thinking of selling a house I inherited - a bit complicated situation. It was in the name of the estate for 13 years due to uncooperative family member. After a few years, I rented it out (short term vacation) some years, some years I didn't. Accountant took depreciation for all 10 years, (even those when it wasn't being rented, and had no rental income )amounting to around $116k total. I own the property now, have owned it for 2 years as a rental. If I sell, what would be my capital gains tax rate, since my regular income is below 39k? Do they count the profit from the sale as part of your income, or just income from other sources? I realize I'll be stuck with the depreciation recapture, even for those years it was owned by the estate, not me. Also, what would the Massachusetts capital gains tax be based on? Can I deduct the depreciation from the cost basis (value on DOD?) or is that rolled into the capital gains? I saw somewhere else that in MA I can't even deduct the real estate comission from the profit. Is that true?  For reference- value on DOD is $330k, can sell for around $500k now. Thanks. 

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3 Replies
M-MTax
Level 10

Capital Gains on Sale of inherited rental property

Maybe get a tax pro for help BUT you're going to pay 15% on the capital gain part and your regular tax rate on the recapture.....up to 25%.

Capital Gains on Sale of inherited rental property

I agree, you really need to get local professional help not only closing the estate but getting the correct cost basis for yourself. This is not a DIY project.

CapeRita
New Member

Capital Gains on Sale of inherited rental property

Thanks, but I already have lawyers in NY & MA, as well as an accountant, whom I've already talked to. Just trying to get a second / more opinions to see if anyone disagrees with what I've already been told, or has any other ideas/insights to the capital gains taxes, and the depreciation recapture. Not fair in my opinion to stick me with depreciation, since I didn't own the house while it was in the estate. But - it is what it is, as they say. Not planning to do anything DYI. 

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