My brother and I inherited our mother’s home after she passed away and we decided to do a sibling buyout. He bought me out for less that half of what the property is valued at and he is keeping the home to live in with his family. Am I subject to capital gains tax with the buyout money I received from my brother?
Your cost basis is half the value of the house and you received less than that so you made no profit and so owe no tax on the sale.
also you do not have a deductible loss because the sale was between related parties. Without knowing the amount involved, whether this was handled so a 1099-S will be issued, can't say what to do as wether or not to report on your tax return.
I just saw something about capital gains LOSS and also gift tax. Would you happen to know anything about those 2 things and if any of that would relate to my situation?
**Side note: I do have an appointment with a tax consultant next week but I’m impatient lol**
Thank you in advance!
you inherited the house, so you have a tax basis of the fair market value on date of her death times your interest.
your share of any subsequent improvements would increase your tax basis.
since you are selling to a related party at less than fair value any loss would not be deductible while a gain would be taxable.