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I am inheriting money from a sale of a secondary residence, do i claim this as income or just the capital gains part?

Palm Coast, FL |

my parents sold us their house for a dollar. we are now selling that residence. what do we claim as income? the whole amount or just the capital gains part?

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Attorney answers 2


It depends upn whether they filed a gift tax return on the property when they gave it to you. If they did and claimed the amount of the value when they gave it to you, then you can just claim the gain. If not, then the entire value.

Check with your own accountant just to be sure.

Good luck.


Your parents made a gift to you of this residence at the time the deed was recorded. For purposes of calculating gain, you take a carryover basis in the property. So if your parents paid let us say $100,000 for the property and made capital improvement along the way of say $50,000 your basis for gain purposes is $150,000. So if you sell the house for $275,000 your gain would be $125,000. Note also, that under the "tacking rules" your parents holding period is counted as yours for purposes of calculating the long or short term holding period.
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