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Old 07-21-2014, 02:59 AM
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Inherited real estate proving market value

In 2009, my husband inherited some real estate from his brother. We thought we were going to sell it right away and didn't have it appraised. We ended up hanging onto it for five years and just recently sold it.

Now I'm trying to figure out if I need to put anything away to cover the capital gains tax. I understand that we will pay on the difference between the value of the property when his brother died in 2009 and the amount we got for it in 2014. Since I don't have a 2009 appraisal, can I use the County Treasurer's 2009 valuation for my 2009 basis? It's really the only thing I have.

After the housing market crashed, our County Treasurer was pretty slow to decrease property values so the 2009 valuation is quite a lot higher than what we actually got for the property in 2014.

Thanks so much!!



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Old 07-21-2014, 11:09 AM
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Originally Posted by Yajtak View Post
In 2009, my husband inherited some real estate from his brother. We thought we were going to sell it right away and didn't have it appraised. We ended up hanging onto it for five years and just recently sold it.

Now I'm trying to figure out if I need to put anything away to cover the capital gains tax. I understand that we will pay on the difference between the value of the property when his brother died in 2009 and the amount we got for it in 2014. Since I don't have a 2009 appraisal, can I use the County Treasurer's 2009 valuation for my 2009 basis? It's really the only thing I have.

After the housing market crashed, our County Treasurer was pretty slow to decrease property values so the 2009 valuation is quite a lot higher than what we actually got for the property in 2014.

Thanks so much!!
Now I'm trying to figure out if I need to put anything away to cover the capital gains tax. I understand that we will pay on the difference between the value of the property when his brother died in 2009 and the amount we got for it in 2014. ========>>>>>>>>>>>>Correct aslongas you have taxable gain from the disposition of the real estate, I mean selling price>basis. An inherited asset you sell for more than the basis is taxed as a capital gain. Aslongas you inherited real estate, you may become liable for two types of taxes ;capital gains tax and level fed estate tax (or inheritance tax to your state,you need to check it with your state Dept of Rev). In most cases, the heir of the deceased taxpayer's estate will be liable for at least one of these two taxes. When you eventually sell your inherited property, you have an obligation to report it on a Sch D/ form 8949 form that you attach to your 1040. The form requires you to report your short-term and long-term transactions separately, since long-term gains are subject to the lower capital gains tax rates and short-term gains are taxed as ordinary income. Therefore, you should always report the sale of inherited property as a long-term gain or loss(as you can see,your basis for inherited property is usually the property's value on the date of death for the person who bequeathed it to you. However, if the personal representative of the estate chose to use an alternative valuation date, your basis is the property value on that date). However, you can still reduce your long-term gains with any short-term losses you incur.
Note;as you inherited property from a decedent who died before/after 2010 , your basis in property you inherit is generally as follows below:The Fair Market Value of the property at the date of the individuals death OR
the FMV on the alternate valuation date, if so elected by the personal representative for the estate.So, the basis for inherited property is generally the fair market value of the property at the date of the decedent’s death, regardless of when you acquire the property

If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes.
Note #2; most relatively simple estates (,small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding; $3,500,000 for decedents dying in 2009; and $5,000,000 or more for decedent's dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010); $5,120,000 in 2012, $5,250,000 in 2013 and $5,340,000 in 2014.

Since I don't have a 2009 appraisal, can I use the County Treasurer's 2009 valuation for my 2009 basis? It's really the only thing I have. After the housing market crashed, our County Treasurer was pretty slow to decrease property values so the 2009 valuation is quite a lot higher than what we actually got for the property in 2014.=======>>>>>>>>>>as said, the value you will use is the appraised value at time of death, FMV ; County or municipal assessment valuations are NOT an indication of current market value. They may or may NOT reflect such valuation. Your error was in not having a professional 2009 appraisal. A professional appraisal at that time would have provided a decent valuation basis. If a federal estate tax return did not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes.

In the absense of any of the above it seems as though you have come up with a way of determining Fair Market Value that is reasonable for tax purposes. You need to contact the appraiser who appraised in 2009 as Appraisal records must be kept a minimum of five (5) years. I guess you may contct your state appraisal boards



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