Inheriting a home can be 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 Cincinnati, Ohio or Northern Kentucky?”
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 Cincinnati and NKY
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 is increased to the market value as at the time of their death. For instance, if a person purchased a home 40 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. This can include houses, furniture and many more things.
If you decide to sell an inherited home in Cincinnati or NKY, that sale is regarded as capital gain or loss for the purpose of income tax. In most cases, for you to qualify for lower rates of long-term capital gains, you are required to have held that property for at least one 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.
As of this writing, there is major tax reform happening in the United States. We recommend you consult with a tax professional about capital gains or any other tax questions you have in regards to inheriting a house.
Reporting the sale
Upon selling an inherited home, you have to report it for 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 tax 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 may have to go through the probate process in Cincinnati as the first step to selling your home.
The court will then authorize you to proceed as you wish. If there are other family members involved, this may be a complicated process. Ideally, everyone will be on the same page, but this is not always the case.
Before selling the house, you should consider how much taxes will need to be paid. This amount will be paid against the capital gains or losses resulting from the sale of the house.
Our company specializes in helping homeowners sell their homes quickly. If you have questions about the probate process, taxes, or anything else, give us a call.
We buy homes fast for cash in Cincinnati and Northern Kentucky. We know the headache it can be to inherit a house. And often, there are many repairs as well as the maintenance of the home to consider. This can often feel overwhelming. If listing the property doesn’t make sense for you and you would rather close quickly on your house, we can help you sell your Cincinnati or NKY house fast.
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 Cincinnati and NKY, and we will be glad to help you.