57. What Are The Tax Consequences When Selling A House Inherited In Lexington KY?

We buy houses in Lexington KYWe Buy Houses In Lexington Kentucky. As local homebuyers in Kentucky, we know that inheriting a home is a pretty sweet experience, yet bitter at the same time. You are left with great property value you can use to improve your life, but you are still mourning the loss of a loved one. So you may tend to ask yourself at this point, “What are the tax consequences when I sell my house in Lexington KY that I inherited?”

The tax consequences when selling a house inherited can be hard to understand and untangle much of the time. The relevant laws may seem fairly simple at first glance, but they get complicated when you factor in all the legal conditions and nuances. The short version is that if you made gains, you’ll owe taxes, and if you had a loss, you may have a tax deduction. But then it gets complicated because whether you made a profit or had a loss also depends on when the decedent died and the use you made of the house.

What Are The Tax Consequences When Selling A House Inherited In Lexington KY?

Capital Gains Or Losses Taxes In Lexington

Cash for houses in Lexington KYThe tax consequences when selling a property inherited in Lexington KY include being subject to capital gains taxes. Capital gains or losses are those that stem from the sale of items you use for personal or investment purposes, such as stocks or a house. So for income tax purposes, the sale of an inherited home in Lexington KY is treated as a capital gain or loss.

The catch with selling an inherited house is that a gain or loss is considered a long-term gain or loss. Further, losses on personal property cannot be claimed as a tax deduction. So if you ever used the inherited property as your personal home, it became personal property, and you can’t deduct a loss if you sell it.

Reporting The Inherited KY House

In some cases, the executor has to file an estate tax return to report the inherited home. But this is only if the estate exceeds the inflation-adjusted exemption amount.

The determination of the gain or loss on a house sale depends on the “basis” of the property. As the basis goes higher, the taxable gain from a sale decreases. There are, however, different rules for the sale of an inherited home that allow for a special stepped-up basis.

“Basis” Determination In Lexington Kentucky

The basis of the house depends largely on when it was inherited. In general, the basis is the fair market value on the date of the decedent’s death. What this means is that the capital gains taxes you owe are based on gains above the property value at the time of the decedent’s death – not what the decedent paid for the property.

If you never lived in the house and if it sells for less than what the fair market value was at the time of death, then you have a deductible loss. Just be aware that only $3,000 of such losses can be deducted each year against your ordinary income. Anything above that $3,000 will have to be carried over as deductions in future years.

Reporting Sale Of The Inherited Kentucky House

Sell my house in Lexington KYObviously, when you sell an inherited home, you have to report the sale (and gains or losses) when you file your income tax return. To calculate the gain or loss, you have to subtract the basis from what you received for the sale. To report the gain or loss, you need to use the standard document for this purpose, the IRS Schedule D. You also have to include the gain or loss on your personal Form 1040 tax return. And make sure you use Form 1040 (and not Form 1040A or Form 1040EZ) for the year in which you sold the inherited house.

Cash For Houses In Lexington KY

The tax consequences when selling a house inherited in Lexington KY can be complex and difficult to understand at best. It’s usually a good idea to find a professional to help you navigate the tax waters.

Selling an inherited home can relieve you of quite a burden. In addition to that, selling the property to professional Kentucky home buyers such as in Good Neighbor Solutions LLC is a basic simple and fast process. Contact us for inquiries on how to go about things when you sell your house in KY and we will be glad to help you.

We’re Ready To Help You Reach Your Real Estate Goals And Will Be Glad To Answer Any And All Questions. Contact Us At (502) 706-6876 Or Fill Out The Online Form!

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