Necessary to pay capital gains tax?

[hifromva]

Property is located in the state of Virginia.

My grandfather purchased a home 46 years ago. He was the first owner (had purchased it after it was built). He lived in this home until his death earlier this month. In 1996, he had my mother's name added to the deed (used a gift deed to make them joint tenants). She currently resides in Connecticut and is disabled. He wanted to add her name to the deed, so that in the event of his passing she would be taken care of (either with a place to live, or with monies she earns from selling), and so that the home would not have to go through probate.

Now the question: My mother wants to sell the home. However, the home when purchased by grandfather was valued at $16,200. Today the value is approximately $222,000. Will she be responsible for paying capital gains tax on the difference?(she will not be buying a new home.)

Thanks for all assistance.

 

[loku]

Surviving joint tenant

Your mother will not have to pay capital gains tax on the difference between the cost of $16,200 and the value of $222,000.

The rule is that the basis (cost) of property that a person holds as a surviving joint tenant is the fair market value of the property at the date of death of the other tenant if the surviving tenant has contributed nothing to the cost of the property. Since the property was your grandfather's and since your mother did not pay any of the cost of purchasing the house, your mother's basis is the fair market value at the date of death.

Probably, what you can sell the property for now is the fair market value at the date of death also (or close to it). The gain on the sale would be the sale price, less expenses of sale, and less the basis. So there will probably be no gain.