“the taxes I wrote about is local property taxes.. You are saying I dont have to show the sale of the property at all on my taxes?”------>Sorry my bad. You will need to consider the tax consequences. As you received property as an inheritance, you may assume the government expects a share.Stepped-up value(UNLESS you inherited it in 2010, I guess), or the value of the inherited property at the time when the previous owner died, allows for less taxable gain when the inherited property is sold. Any appreciation in the value of the property during the decedent’s lifetime is forgiven. You are taxed only on appreciation after inheriting the asset. If the property has declined in value since you inherited it, you may be able to claim a loss deduction on your taxes.
“What about the 1099-s from from the sale? “---->As you can see, capital gain or loss can be classified as either long or short term. However,an inherited property is considered a long-term asset regardless of how long it was actually held. So your gain on the sale of the pty. is LTCG/LTCL. Then you would pay capital gains tax on the difference between the value of the inherited property the day you inherited and the value of the property on the day you sold it.
“And I cant deduct the property taxes from the sale price and other expenses to prepare to sell this worn property and get some of my money back out? “----->It depends;aslong as you itemize your dedcutions on Sch A of 1040 , then you can report it on Sch A line 6. If you do NOT itemize your deductions on Sch A ( but take tour std ded on your 2011 return), then you can’t deduct the pty taxes.
“I am even more confused. I know I have to show the sale on this property, how do I do that? lets say I sold the property for $15,000, how do I show it?”----->Correct; you do have report the sale on Schedule D of 1040. You need to file Form 8949 and report the amount on Form8949 line 4 on Sch D line 12 and report it on line 16 and you need to complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040 line 44 and report it on 1040(you can follow the instructions on the w/s o).
Please visit the IRS websites here: http://www.irs.gov/pub/irs-pdf/f8949.pdf http://www.irs.gov/pub/irs-pdf/f1040sd.pdf
If you are preparing the Schedule D , your date of purchase is the date of the person(from whom youinherited the pty) death. If a Form 1099-S was filed (check with the title company who handled the transfer of the deed), make sure the sales proceed on your Schedule D matches what was reported to the IRS. You can determine what the FMV was at the time of the settled estate though comparative r/e value method( by an appraisal). The IRS wants their cut, but I want to be able to take off my rightful expenses from the sale before the taxes.