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Inheriting a House in Mammoth |
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What are the rules on capital gains when inheriting a house in Mammoth?When children inherit a house in Mammoth, the Internal Revenue Service determines their basis in the property on the date of the owner's death. The cost basis is not the amount the owner originally paid for the house in Mammoth, but the property's fair-market value on the date of the parent's death.
Cost basis is a tax term for the dollar amount assigned to a property at the time it is acquired, for the purpose of determining gain or loss when it is sold.
For example, one of the three siblings sold his or her share of a house in Mammoth to be divided equally, he or she must pay capital gains tax for whatever profit made over one-third of the new basis.
Other tax consequences for inheriting a house in Mammoth include estate taxes. However, the estate must total $675,000 or more for tax year 2001 before tax issues become a concern. The IRS allow residents to pass on property, cash and other assets worth up to a total of $675,000 for tax year 2001 before charging the heirs any taxes. This figure will rise each year for the next several years they own the house in Mammoth.
Regarding the transfer of ownership of a house in Mammoth, quit-claim deeds often are used between family members in situations such as this when an heir is buying out the other. All parties must be agreeable to dropping a name from the title of the house in Mammoth.
For more information, consult the IRS's Publication 448, "Federal Estate and Gift Taxes." Order by calling 1-800-TAX-FORM.
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