Inheriting a property can be quite the bittersweet experience… On one hand, you are left with real estate you can use to improve your situation in life, on the other, you are still grieving over the passing of a loved one. But, you may be wondering, “what are the tax consequences of selling a house I inherited in Salt Lake City UT?” The tax laws were set up in a manner that they won’t increase the burden you face when inheriting a home. This translates to simpler financial obligations than you might expect, which is great for you. 🙂
The Tax Consequences of selling a house I inherited in Salt Lake City UT
To understand how you’ll be taxed after inheriting a home, you’ll need to familiarize yourself with how basis is calculated. In this instance, basis refers to an asset cost with the intent of calculating capital gains along different taxes. After someone passes away, the basis or value of the property they owned in Salt Lake City is raised to the full market value as it was at the time of their passing. As an example, if someone bought a home 30 years ago for $20,000 but it was worth $120,000 when they died, that home would be valued at the latter figure for the reason of calculating capital gains.
The taxation of gains or losses
Capital gains and losses are terms referring to the earnings you make from selling a property for personal or investment use. This can be a home, furniture, or other things. If you make the choice to sell your inherited home in Salt Lake City, that transaction is looked at as a capital gain or loss in regards to income tax. Often, in order to qualify for lower tax rates of long-term capital gains, it’s necessary that you have owned the property for at least one year. For inherited homes, the duration of your ownership doesn’t matter, as any loss or gain will be viewed as long-term.
Reporting the sale of inherited property
Once you sell your inherited property, you must report it for income tax reasons. First, begin by calculating your capital loss or gain. You can find this by taking the sale amount and subtracting the basis from that. Then, you are responsible for reporting this amount to the appropriate tax authorities.
Becoming the owner of a home you inherit can be stressful since you not only have to look after the new property but pay taxes on it as well… The first step you should go through in selling your home is the probate process in Salt Lake City. The probate court will then give you the green light to proceed. If there are others who have a say in the inherited property, you’ll need to first all go over the plans to sell together. Then, once your party’s in agreement, you’ll file a petition to the court who can then allow you to legally sell the property.
Then, you’ll need to calculate how much you owe in taxes. Paying these funds will cover the capital gains or losses that are a result of selling the home. Consider calling Property Seller Solutions now at (801) 876-1036 to begin the safe and legitimate sale of your inherited home. We are Salt Lake City UT locals who know this market better than anyone. If you still have questions like “what are the tax consequences when selling a house I inherited in Salt Lake City,” we would be more than happy to discuss this in more detail with you.
Selling a property you’ve inherited can lift a huge burden off of your shoulders. Additionally, choosing to sell your home to an investor is a safe, simple, and quick process. Give us a call or message to discuss how to go about selling your home in Salt Lake City. We’re here to help you.