inherited home and insurance settlement

[badger1]

What is the name of your state? Wisconsin. Mom passed away two months ago, my brother and I inherited her home. No balance on house, last valued at 77,000. We are selling home to my niece and her husband at 50,000 to keep home in the family plus to make it easier for them to afford. What if any tax burdens should my brother and I expect to face. Thank you.

[LdiJ]

Originally Posted by badger1

What is the name of your state? Wisconsin. Mom passed away two months ago, my brother and I inherited her home. No balance on house, last valued at 77,000. We are selling home to my niece and her husband at 50,000 to keep home in the family plus to make it easier for them to afford. What if any tax burdens should my brother and I expect to face. Thank you.

Your "basis" on the home is the market value as of the time you inherited the home. Obviously if you sell the home for below your basis you are not going to be recognizing a gain.

However, if you are clearly selling the home below market, then you may need to recognize a "gift" to your niece and her husband. Between you and your brother it appears that you would have enough allowance to avoid gift taxes. (assuming that the 77,000 value is accurate).

[badger1]

My niece and her husband actually are approved for a 65,000 loan on the house. They are using 15,000 for home improvements. My brother gave them a gift of 11,000 and I signed for a 4,000 gift to them. Thus making the home we sold to them for 50,000 plus a combined gift of 15,000 for my brother and I to total up to the 65,000 loan they are approved for. I hope this makes sense. Thanks again for your input. P.s.- I did not know if this was the correct area to ask this. Auto insurance company for other driver who rear ended me in june 04 is settling my case now for 35,000 for medical bills and pain and suffering. Do I have any tax obligations on the 35,000. All bills are settled and no further expences expected. Thank you.