Probably not very much.
If the house was inherited (and not passed by gift or something else) then the cost basis is the fair market value on the date of his death. Any capital gain would be the difference between the selling price and the cost basis, so if the home was sold fairly close in time to the date of death, then the cost basis and selling price will be about the same and there will be no taxable capital gain, even though the cash proceeds might be significant.
If the home changed value significantly between the date of death and date of sale (a rapidly changing real estate market) then you might have a taxable capital gain, or even a deductible capital loss, if housing prices dropped. You would want a qualified appraisal to document this. If there is a taxable gain or deductible loss, then each sibling would report an equal share (half, thirds, quarters, etc.). You may want some professional help if you think there is a significant gain or loss.
If the house was transferred by gift or in some way other than inheritance, you should get legal/tax advice from a professional.
If there is a taxable gain, expect to pay 15% federal capital gains tax, or 20% if your total taxable income is more than $250,000 (single) or $400,000 (married). Most states tax capital gains the same as regular income, so between 3%-13% depending on your state and your other income.
@ljharnick , agreeing with excellent reply from @Mike9241 , just wanted to add that this is so if , and only if , your father did not put the house in an irrevocable trust. This is sometimes done to meet the "spend down' path/ requirement to get medicaid. . This is because in such a case the trust and its contents/assets are outside the "Estate " of the demised person and hence generally cannot get a step-up. Most people just have a revocable trust and so it is not an issue.
Q. Is there a calculator that will show how much I will pay on taxes of the sale?
A. Try this tool https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1. Enter your regular income first to see the regular tax. Then add the gain to see the effect on your tax. Your share of the sale price of the house is not taxable income. Any taxable income is the the capital gain (profit) on the sale. Enter the difference between the sale price and your cost basis as a long term capital gain (LTCG).
But, as others have said, you most likely do not have a gain, because the stepped up value of your share of the house is your cost basis. Given the expenses of sale (e.g. Realtor commission), you may even have a loss. So, another question you might want to ask is:
Q. Is a loss on the sale deductible?
A. It depends on how the property was used between the time you inherited it and sold it. You may deduct a loss on investment property, but not on personal use property.
If the house sat vacant during that time, then it was "investment property", and you can deduct the loss. If it was used as a home by any family member, it is personal use property and you cannot deduct the loss on your share.
Still have questions?Make a post