Real estate

[user17519340791]

The owner of the house my mother passed away in 1988 and at that time it was worth about $200 K. I am the inheritor of the house, her daughter and want to sell for $700 K. How much will my capital gains be??

[rjs]

Your capital gain will be $500,000, and it is a long-term gain. The gain is the amount you sell the house for, $700,000, minus your basis, which is the fair market value on the date that your mother passed, $200,000. How much tax you will have to pay on that $500,000 gain depends on your filing status, your other income, and many other factors. It also depends on what you did with the house between your mother's passing and when you sell it. Did you rent out the house? If you have been living in the house within the 5 years preceding the sale you might be able to reduce the amount of taxable gain considerably.

[Opus 17]

Don't forget you can increase your cost basis by any costs you paid for permanent improvements (new roof, new furnace, carpet or hardwood floors, kitchen remodel, etc.). This means items attached to or part of the house--a built-in stove would count but not a freestanding range.  Also, you can only include costs for items that are still part of the house.  For example, if you replaced the roof in 1990 and again in 2020, you can only include the cost of the 2020 roof. 

You must reduce the cost basis by any depreciation you claimed or could have claimed for business use of the home, such as as a rental, or home office deduction, or home daycare. 

You can also adjust the selling price by certain closing costs, see publication 523.

https://www.irs.gov/forms-pubs/about-publication-523

Then, your capital gains is simply the net selling price minus the cost basis.  How much tax you will pay depends on many other factors, most importantly, have you lived in home as your main home for part or all of the time since you inherited it?