How do I report the sale of a vacation home that my late husband and I purchased together and I inherited sole ownership of when he died?

[slp4869]

I sold it at a long term gain 4 months after he died. Am I responsible for tax on all or part of the gain?

[Anita01 · Accepted solution]

You are responsible for the tax on all of any gain, since you owned the entire property when you sold it.  To figure your cost in the property, you would use 1/2 the current market value at the time he passed away and 1/2 the original purchase price.  If you live in a community property state, you could write up the entire cost to market value at the time he died.  You would sell this as a second home under investments.

[slp4869]

Thank you! I live in Washington state which is a community property state but the property I sold was in Arizona. We held the deed as community property with right of survivorship. Can I use the market value at the time of his death for the entire cost basis?