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Buying or Selling a Home/INCOME TAX on sale of gifted home

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Expert: - 8/4/2009


Question
My mother's house that she lived in for 70 years was signed over  to me. 1 year later after she signed it over to me she died.  I just sold the house for about $500,000. (I never moved in) Do I have to report and pay INCOME TAXES on this amount?  We are in NY.

All the articles talk about capital gains but not income tax.

thank you
Jason

Answer
Hi Jason...

Your question is spot on but your how it happened is a little fuzzy... Now I am not a tax expert nor can I give advise for taxes... but  basically...

Your mom owned a home for 70 years, she 'Signed it over to you" ? Quiet Claimed? and one year later she died?  Am I ok so far?

Because she gave you the home, you loosed the 'stepped up value basis' which would have saved you on taxes... now you sold the home that you never lived in for $500,000 and I believe from your statement this all happen in over one year of 'owning the property' so you now owe capitol gains taxes, and since you never moved in you don't have the $250-500,000 tax free situation...

you will need to take the value of the home at transfer from mom to you... minus the cost of the sale, minus capitol improvements and against the sales price and that is your taxable amount you will owe taxes on...

Please consult your tax advisor or lawyer so that you know exactly what you have left over to profit from... and again I am assuming a lot here... you could have 1031'd the deal and not paid tax at all, it would have been deferred... hopefully your agent or advisor mentioned this to you...

Good luck

PS...the articles on capitol gains are regarding the income tax.. it is not income like a job, this is long or short term gains depending on how long you owned the property and how it was treated... according to your tax returns.. SEE A TAX ADVISOR!

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