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Federal Taxes?

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NeedHelpInPA

Junior Member
What is the name of your state? PA

My Mothers will is coming to a close, I can finally start the process of selling her house.
She left it to me and nephew whom I agreed to sell it to for a family member sale to in part ease is his burden on how much he has to pay and to ease the amount of taxes I would have to pay.

My sister is the executor, and she explained to the lawyer of what my plan is, and they asked why I was taking so much money off the house value, and she explained my reasons, they said that selling my mothers house is not federally taxable, and not counted as income since it is consdered a gift.

Remember these are professional lawyers saying this.

I was under the impression that if the house becomes liquid, or revenue is earned such as from renting the property, than all monies are taxable?

Please can you tell me which one is true and why? I would love to the believe the lawyers.
 


LdiJ

Senior Member
What is the name of your state? PA

My Mothers will is coming to a close, I can finally start the process of selling her house.
She left it to me and nephew whom I agreed to sell it to for a family member sale to in part ease is his burden on how much he has to pay and to ease the amount of taxes I would have to pay.

My sister is the executor, and she explained to the lawyer of what my plan is, and they asked why I was taking so much money off the house value, and she explained my reasons, they said that selling my mothers house is not federally taxable, and not counted as income since it is consdered a gift.

Remember these are professional lawyers saying this.

I was under the impression that if the house becomes liquid, or revenue is earned such as from renting the property, than all monies are taxable?

Please can you tell me which one is true and why? I would love to the believe the lawyers.
Your impression is incorrect.

Yes, if you rent the property, the rent minus expenses would be taxable income. However that is because the rent is not your inheritance. The rent is additional monies you earn on capital you already have.

When you inherited the property, your "basis" became the fair market value of the property at the time your mother passed away.

Whenever an asset is sold, the portion of the sale that is taxable is the gain. The gain is the difference between your basis, and the price for which the asset is sold.

Therefore, if you sell your half to your cousin, at fair market value, you will have no gain, and will therefore pay no taxes.
 

anteater

Senior Member
The OP's post is kind of vague and confusing. I read it as the OP selling his/her share to the nephew at less than fair market value.

Still should be no income tax consequences. But the OP might have to do some accounting for a gift to the nephew????
 

LdiJ

Senior Member
The OP's post is kind of vague and confusing. I read it as the OP selling his/her share to the nephew at less than fair market value.

Still should be no income tax consequences. But the OP might have to do some accounting for a gift to the nephew????
I agree it was a little vague, but I believe OP intended to sell his/her share to the nephew, at below market, because he/she believed that the sale was going to cause the equity to become taxable income...therefore the agreement to sell below market was to save money in taxes (not particularly logical though).

Then he/she heard that perhaps it wasn't going to be taxable, therefore indicating that he/she might make a different decision if that were true.
 

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