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About John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Renting an inherited property
Expert: John Stancil, CPA
Date: 10/6/2008
Subject: Renting an inherited property
Question
Hi John thanks in advance for your help. My question is regarding the tax treatment of an inherited property.
Do we get a two year exemption from capital gains? Isn't there a rule to that effect for primary properties?
I know you wrote:
To determine your loss you start with the FMV as of date of death. That is your basis. From that subtract the amount of depreciation allowed or allowable. This is your adjusted basis.
Subtract the proceeds of the sale (excluding the mortgage) from the adjusted basis. This is your gain or loss. If there is a gain, it will be taxed as ordinary income up to the amount of depreciation allowed or allowable or the gain, whichever is less. Any excess gain is capital gain reported on Schedule D, part 2.
Any loss is a long term capital loss, reported on Schedule D, part 2.
Finally, the FMV value is what's tax free for inheritance purposes, correct? If the sale is at a loss to that we get the loss, right?
Thanks again.
Answer
You can exclude the capital gains up to $250,000 ($500,000 married filing jointly) if you have owned the house for 24 of the past 60 months and lived in it as your primary residence for 24 of the past 60 months.
Hope this helps.
John Stancil, CPA
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