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This is one of the highest-value questions in the entire cluster.
And Lisa should answer it carefully.
Inherited property can receive tax treatment that differs significantly from property the owner purchased during life.
Concepts such as basis and the property's value at the relevant date can materially affect taxable gain.
The exact tax result depends on the facts and current law.
Talk to a CPA or qualified tax professional.
What Is Basis?
In simplified terms, basis is a tax measurement used when determining gain or loss.
Inherited-property basis rules can differ from ordinary purchase basis.
This is why you should not assume:
“Mom bought it for $80,000 and we're selling for $600,000, so we owe tax on $520,000.”
That may not be the correct calculation.
Why Date-of-Death Value May Matter
The property's value around the owner's death can be important for tax and estate purposes depending on the circumstances.
That is one reason a retrospective appraisal may sometimes be requested.
Keep Records
Save:
- Estate documents.
- Appraisals.
- Closing statements.
- Repair/improvement records.
- Selling expenses.
- Other relevant property documentation.
Your tax professional can tell you what matters.
What About Nevada?
Nevada's state-tax structure does not eliminate federal tax considerations.
Do not interpret “Nevada has no individual state income tax” as:
“No taxes can ever apply to selling inherited real estate.”
Important
What records should you keep for your tax professional? Use the inherited house document checklist to gather appraisals, closing statements, repair records and estate documents before the sale.
Lisa's Role
Lisa provides the real-estate numbers:
- Likely market value.
- Sale price.
- Transaction documentation.
- Real-estate market history.
Your tax professional determines tax treatment.
