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Inherited house

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Deja_vu2000

Junior Member
What is the name of your state?Missouri

If you inherit a house, paid off remaining mortgage (small balance), then sell the house, do you have to pay taxes on the profit?
 


Deja_vu2000 said:
What is the name of your state?Missouri

If you inherit a house, paid off remaining mortgage (small balance), then sell the house, do you have to pay taxes on the profit?
Did you inherit the property through the estate or was your name on the deed as joint tenants with rights of survivorship? I assume the latter because there is apparently still a mortgage on the property that had to be satisfied. If it was the former, and the mortgage was totally in the decedent's name, then the estate would have probably paid that debt.

The difference is very important because it will affect your basis in the property and your potential tax liability in terms of capital gains. If you inherited it through the estate, then your basis is the fair market value of the property when you received it. If you were simply inherited it by being on the deed then your basis is the same as the decedent's basis and your potential tax liability could be a lot more.

If it's the latter, and you want to sell you might look into doing a 1031 tax exchange. (I'm assuming this wasn't your personal residence.) That would allow you to at the least postpone paying capital gains tax on the gain, maybe avoid it all together down the road.
 

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