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How to avoid paying capital gains tax on inherited property Form: What You Should Know

Why should I report the sale of an inherited property to the IRS? A few years back,  Capital Gains Tax on Inherited Property — SmartAsset.

Online solutions help you to manage your record administration along with raise the efficiency of the workflows. Stick to the fast guide to do Form 1099-S, steer clear of blunders along with furnish it in a timely manner:

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Hi all, Amy Ornelas here. Ornelas Property Management is located in Denver, Colorado. Yesterday, my husband and business partner and I went to speak with our accountants regarding some business matters. At the end of our meeting, our accountants asked if they could pose a question unrelated to our business affairs. They mentioned that a situation has become increasingly common with their clients: a client had recently inherited a property 12 years ago. The accountants asked the client about the value of the property at the time of inheritance versus the amount owed on it. To illustrate, let's use some general figures. Let's say my parents passed away and left their house to me. At the time of their passing, they still owed $100,000 on the house. The property was valued at $200,000 when I inherited it. Five years later, I decide to sell the property, and now it's worth $300,000. In this scenario, I won't have to pay capital gains tax on the $200,000 deficit (the difference between the value when I inherited it and the mortgage owed). Instead, I'll only be liable for capital gains tax on the $100,000 difference in equity between the inherited value of $200,000 and the selling price of $300,000. This distinction significantly affects the amount of taxes owed. Anyway, I hope you all continue to send in your questions. It was remarkable that our own accountants sought personal advice from us. Have a fantastic day, everyone! The weather is beautiful outside. Enjoy the Bronco parade. See you later, bye.