Inherited home that was recently sold

[Jonathan1]

My Mom passed in September 2021.  She had lived in an apartment in Florida that she had purchased in 1998.  As per her will, I inherited this property.  I sold her apartment for 150k in April 2022.   So, about seven months after she passed. I have a primary residence in NY. 

I am requesting some clarification regarding reporting capital gains on this property .  Are capital gains derived based on the original 1998 purchase price - there were no improvements on her apartment since that time?  Or, are capital gains derived based on the value of the property at the time I inherited the property in September 2021. 

I read something recently that a stepped up basis process should be used.  If stepped up basis should be used - what is a way I can determine the cost basis of the apartment as of the date my Mom passed.

Thank you for any guidance on this and I admit maybe there are some elements of this that I need to still provide to help frame an answer to this.  I'm not seeking legal advice - just the best way to report the sale of this inherited property. 

[Anonymous_ · Accepted solution]

I am sorry for your loss.

Your basis in the property would almost certainly be the fair market value on the date your mother passed away.

The best approach would be to obtain an appraisal from a certified real estate appraiser. Failing that, you could get a CMA from a licensed real estate broker (or agent).

[MayaD · Accepted solution]

Per IRS:

The basis of property inherited from a decedent is generally one of the following:

• The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return 
• The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.

For information on the FMV of inherited property on the date of the decedent’s death, contact the executor of the decedent’s estate.

[Jonathan1]

Thank you so much Champ for your informative and timely reply.  Much appreciated. 

[Jonathan1]

Thank you so much Maya.  Very much appreciated and helpful 🙂