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Old 09-15-2015, 05:05 PM
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Buy out brother of inherited house

Hi,

My brother and I inherited our parent’s house in Jan. 2009. I am buying him out for 1/2 the current value.

I am married and neither of us has lived in the house since we inherited it. How do I claim the house on the CA form 593-C?



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Old 09-16-2015, 04:19 PM
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When your brother sells property to you , his tax basis for the property is the home’s fair market value on the day our father who willed it to him died. The difference between that value and the amount your brother realizes from the sale is the gain on which your brother owes taxes. So,for example, if the home was worth $300K when father died and your brother sells his portion, $150K, for $350K and then he claims a $25K gain.So, he needs to report it on his return as LTCG; gains on dispositions of assets held for more than one year. The long-term capital gains tax rate is either zero percent, 15%, if his tax rate is higher than 15% or 20% if his marginal rate is 38.6%, depending on your marginal tax rate.

If he sells for the value of the home or less, he doesn’t have a gain to report. Your basis on the home is 50% of the FMV oif the home when you inherited and your portion of the LTCG plus the purchase plus you paid to y our brother. For your sate return, you need to contact an IRS enrolled agent or a CPA doing taxes in your local area for more help in detail.



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Old 09-16-2015, 04:22 PM
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Upon payment for his share, he gives you a Quit Claim Deed. I guess you may see an attorney to make sure the Deed is in proper format, that there are no liens on the property and that the description of the property is accurate



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