Inheriting a home is a bitter sweet experience, you are left with great property value you can use to improve your life, but you are still mourning the loss of a loved one. So you may tend to ask yourself at this point “what are the tax consequences when selling a house I inherited in Baltimore MD?” The financial consequences are not that overwhelming than what you expect because the tax laws have been designed in a way they will not add any more burden unto you upon inheriting the property, which is good news for you. 🙂
Tax Consequences when selling a house I inherited in Baltimore, MD
Calculation of basis
In order to understand how you’ll be taxed having inherited a home, you need to know how basis is calculated. In this case the basis refers to the asset cost for purpose of the calculation of capital gains along other taxes. When a person dies, the value or basis of their property in Baltimore is increased to the market value as at the time of their death. For example, if a person purchased a home 20 years ago for $25,000 but it was worth $100,000 at the time of their death, that property would be valued at the latter amount for the purpose of calculating capital gains.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. Example of these can be houses, furniture and many more things. If you decide to sell an inherited home in Baltimore, that sale is regarded as capital gain or loss for the purpose of income tax. The qualification for lower rates of long-term capital gains requires you to have held a property for at least a year. However long the duration you have been in ownership of an inherited home, any gain or loss will still be treated as long-term.
Reporting the sale
You should then report that amount to the necessary authorities. Computation for your capital gain or loss should be done first. This is done by subtracting the basis from the sale amount. You should report upon selling an inherited home for the income tax purposes.
Having an inherited home can be stressing given the fact that you have new property to take care of and pay taxes for it at the same time… You should go through the probate process in Baltimore as the first step to selling your home. The court will then authorize you to proceed as you wish. If there are any other individuals involved in the inheritance, you should first settle with each other on that decision. You can then file a petition requesting the court to allow you to sell the property.
You should then consider how much tax you are to pay. This will be paid against the capital gains or losses resulting from the sale of the house. You can call Impact Home Team 410-824-1687 now at (410) 824-1687 to undertake a smooth and legitimate sale of your home. We are local here in Baltimore MD and we know the market here better than anyone else. If you are still asking yourself what are the tax consequences when selling a house I inherited in Baltimore, then we would be happy to discuss it with you in more detail.
Selling an inherited house can relieve you of quite a burden. In addition to that, selling the property to an investor is a basic simple and fast process. Contact us for inquiries on how to go about things when selling your home in Baltimore and we will be glad to help you.