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probate, process and responsibilities with taxes and beginning probate in WA state
Seattle, WA
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Posted about 1 year ago in Probate
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Inheritance, taxes, and step up basis:
My father died in AZ Sept 2007. His will said that his 3 children inherit the house. Come to find out that my sister was on the house deed since 2000. My brother and I hired an attorney to be put on the deed as tenants in common and sell the house immediately. My question is, on my taxes after the sale, will the house be considered inherited and I would pay step up basis on capital gains? or will I have to go back to the 2000 basis as I believe she will.
Answers (2)
Richard Wills
This attorney is licensed in Washington and 1 other state.
Posted about 1 year ago.
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Assuming your interest in the home was received resulting from your father's death, you should receive a stepped-up basis in the home, equal to the value of the interest that you received on your father's date of death.
Kent Anderson
This attorney is licensed in Oregon.
Posted about 1 year ago.
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When you inherit property you are entitled to a "step up" in basis. Consequently, you will only be taxed on the increase in value between the date of your father's death and the date of sale. However, you pose a more difficult question. Since your sister was "on the deed" I assume you mean that she was a joint tenant and took full title when your father died. I also assume that you sued your sister, or got her to agree that you and your brother were entitled to share the inheritance. Assuming those facts, you should be entitled to a step up in basis. If the transfer from your sister to you and your brother was considered a gift, you would take the gift with the basis your sister has in the property.
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