Inheriting a home is a pretty sweet experience, yet bitter at the same time… 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 Virginia Beach VA?” The tax laws have been designed in a way they will not add any more burden unto you upon inheriting the property. This implies that the financial consequences are less daunting than what you would expect, which is good news for you. 🙂
Tax Consequences when selling a house I inherited in Virginia Beach, VA
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a home, you need to know how basis is calculated. Basis, in this case, 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 Virginia Beach is increased to the market value as at the time of their death. For instance, 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
When it comes to inherited homes, the taxation of any gains or losses will depend on a number of factors. These include the value of the property at the time of inheritance, as well as how long you held onto the home before selling it. If the value of the property has increased since you inherited it, then any profit you make from selling it will be considered a capital gain. This gain will be taxable, but if you have held onto the property for more than a year then you may qualify for lower tax rates on your capital gain.
On the other hand, if the value of the property has decreased since you inherited it, then any loss you incur when selling it will be considered a capital loss. This loss can be used to offset any other capital gains you have made in the same tax year, and may also be used to reduce your overall taxable income. When it comes to inherited homes, the taxation of any gains or losses will depend on a number of factors. These include the value of the property at the time of inheritance, as well as how long you held onto the home before selling it.
If the value of the property has increased since you inherited it, then any profit you make from selling it will be considered a capital gain. This gain will be taxable, but if you have held onto the property for more than a year then you may qualify for lower tax rates on your capital gain.
Reporting the sale
Upon selling an inherited home, you have to report it for the income tax purposes. You should first calculate your capital gain or loss. This is done by subtracting the basis from the sale amount. You should then report that amount to the necessary authorities.
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 Virginia Beach 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 agree 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 Wise Choice Home Buyers now at 757-800-1870 to undertake a smooth and legitimate sale of your home. We are local here in Virginia Beach VA 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 Virginia Beach, 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 Virginia Beach and we will be glad to help you.