My mom's house in Calif. is in a living trust. My dad passed away (1999). She has moved to a senior apt. complex. My sister and I will inherit the house someday. My mom doesn't need to sell. My question is should we rent or sell. If my sister and I inherit it and then sell what will the capital gains be? If my mom sells what will they be.
122461
Upon your mothers death you would inherit the house tax free with a stepped up basis equal to its current market value. At that point you could sell it with little or no tax consequence. If her estate is under the threshold in the year she died, the estate would not have a tax either. Since I don't know the value of her estate, I can't answer that ??. If you sell now, she might have a taxable event if the house appreciated more than $250K since 1999 basis she got when your dad died. \n\nThere are a few wrinkles based upon the info above. If it were my own situation, I know enough to make the decision, in your case you should spend an hours time with a CPA who knows estates & trusts.\n\nIf you want, post your moms basis on DOD in 1999, current value and size of estate and we could hash it out a bit more. However it is still wise to see a CPA.
562854
It's a good idea, simply because homes appreciate over time (maybe a lot of time, but they generally do).  \n\nYou have to take into consideration what the mortgage and taxes and insurance will cost you on a per month basis.  Then you have to figure out if you can rent it for that figure.  If you can, or can get more, is it worth the extra tax for the income?  If it's not, do you need the loss for your taxes?  \n\nRemember, when it's time to sell income property, you have to pay taxes on it unless you do a 1031 exchange, but that just means you're buying into another income property.  \n\nFinding good renters can be hard.  Can you pay for the house if it sits for a couple of months unrented?  Do you hav e the time to really check out a potential renter?  To be a landlord?\n\nThere are a lot of pros and cons.  If you have the time and the resources, by all means, hold on to it because real estate is a great thing to have.  But it's a lot of work too!\n\nGood luck  :)
50851
Sorry about your dad.\n\nIf a person dies without a will (intestate) the distribution of the estate is overseen by the probate court.\n\nBy intestate succession, the remaining estate is distributed to the closest surviving relatives. In most states, that would be the surviving spouse, children, parents, and other siblings, in that order.\n\nIf your mom is still alive, she should get the estate. If she is not, then it should be split between children.\n\nYou probably should consult with a lawyer familiar with estate laws.  You can also get a lot of information on the web, search for "intestate" and "probate" specific to the states involved.
425664
I'm just going off the top of my head here without looking anything up, so just use my answer as a guide and not fact.  (Because staring at the code is factual, but sometimes doesn't get you very far in thought.)\n\nThe rental property.  Chop this up into three components - land, building and personal property.\n\nLand, as you know, is not depreciable.  But it should be listed as a separate component of the sale.  \nThe building is depreciable, but will also be under an additional code section, 1250.\n\nThe general rule starts with section 1231 property.  Then, depending on what it is, it might ALSO be 1245 property or 1250 property.  But just to keep things simple, think 1245 = equipment and 1250=buildings.\n\nBoth 1245 and 1250 pretty much say this: When you sell the asset, the amount over adjusted basis, up to the extent of depreciation taken, is ordinary gain.\n\nFor example.  I bought a piece of equipment a few years back for 10,000.  Tuesday, when I sold it, it had a tax adjusted basis of 1,000 (10,000 historical value less 9,000 of accumulated tax depreciation taken).  I collected 5,000.  In this case, ALL of my 4,000 gain (5,000 sales price less 1,000 adjusted basis) will be ordinary income.  \nLet's say I sold it for 12,000.  9,000 of my gain would be ordinary and 3,000 capital gains.  \nNow I'm babbling.  But in a nutshell, you are recapturing the depreciation expense at ordinary, just like you took the expense (over time).\n1250 for buildings has something similar, but not many have that issue anymore (unless they were purchased over a decade ago or so).  There is some special additional tax on the gain or special rate.\nBut the losses are ordinary, thankfully.\nAnd I feel like I'm getting off track here, but I'm trying.  :)\n\nBut onto the land.  It depends.  And perhaps this is where saying more info is needed might help.\nIf this is a separate piece of land accounted for seperately and Mary can prove that she wasn't going to improve anything, then there might be support for the claim that it is a capital asset and the gains are capital.\nHowever, that would be really agressive to me considering it saysing "holding for future development" and if there has been anything substantial done to the property.\nIn short, you will want to check out code section 1237 for reference too although it doesn't exactly fit your problem.\n\nAnd last but not least, I'll clog this answer with an Explanation nabbed from my own stuff.  Good luck on your research and forgive me for such a lengthy answer.  Usually I hate stuffed answers.  Cheers!\n\nReal property produces capital gain or loss on its sale or exchange if it's a capital asset. The main reasons for the exclusion of real property from the capital asset category are (1) that it's property held by the taxpayer primarily for sale to customers in the ordinary course of his business, and (2) that it's real property used in his business. Code Sec. 1221(a)(1) , Code Sec. 1221(a)(2) . However, the sale or exchange of real property used in a business (including rental realty), or the involuntary conversion of such property or real property that is a capital asset, can produce a Code Sec. 1231 gain or loss. \n\nThe fact that real property is held primarily for sale to customers in the ordinary course of a taxpayer's business precludes it from being either a capital asset or a Code Sec. 1231 asset (business-use property). Code Sec. 1221(a)(1) ; Code Sec. 1231(b)(1)(B) . The factual question of whether real property was so held gave rise to intensive litigation. Cases decided under Code Sec. 1231 are covered as part of the question of what property is used in a business. Decisions delineating property that is a capital asset are covered in this subdivision. The special rules of Code Sec. 1237 , allow taxpayers other than C corporations to obtain limited capital gain as to property subdivided for sale under certain circumstance
540806
This is a tricky one.\n\nYou would pay capital gains taxes on the difference between the sale price and the basis.  The basis would include the original cost plus any improvements.  The property taxes were probably deducted each year so you can not add those to the basis.  You may get a "stepped-up" basis for half of the land based on the fair market value of land on the date of his death.\n\nIt is time to see a professional.  I would not attempt this on your own.
262554
You could rent for a year while you decide for sure what area you want to buy in.  That's what we did when we moved into an unfamiliar state.  Then you won't get stuck with a house in a neighborhood you end up really disliking.  Just be sure to check what the time-line is on reinvesting your capital gains on the sale of your current home.
70465
you most certainly want to receive the house after death. you get a stepped up tax basis. you should have your parents set up a living trust to avoid probate.\n\nsee an estate planning attorney.. the tax savings can be very LARGE>
76560
You need to give more detail for a good answer.\n\n1)  Are you getting married?  What state are you in?  The property?\n\n2)  What are you using to purchase the property (your money? her money? parents money?)\n\n3)  If financing, who is taking the loan?  With what collateral?  Who is paying it off?  With what?\n\n4)  What form of title?  Joint Tenants?  Tenants in common?\n\n5)  Why the hell would you want to put your in-laws on the title?\n\n... and so on.\n\nIf you bought it today with your own money and put three other names on the title, you could still have a case to get 100%.  However, it may be determined a gift to the others and you would get only a percentage, and a whole lot of other variables depending on the other details may affect that.
612220
i haven't read any other answers on here, so if i repeat, i'm sorry, but its hard to build off someone else's answer.\n\nSInce it was a house, its likely that it was owned in Joint Tenancy by your father and mother.  This mean that your father had no share of the house to give away if he was the first to die.  Joint tenancy is a term of art in the law, which means it has a specific definition, and that includes 'right of survivorship'  meaning the surviving tenant gets all of the deceased tenant's interest without going through probate.  The house was only ever partially owned by either parent, they agreed when they bought it, that the first to die would have their interest automatically go to the survivor.  this meant that your dad didn't have a half interest to give away at his death.\n\nThe will giving all assets to the mother....that's not making sense to me....how did you end up with a share in the house in the first place if not through the will?  \n\nfor your initial question, you can do pretty much what you want with your will, but there are certain things the court is not going to allow, such as shutting a widow(er) out of a share in the estate.  Also, a longtime married couple has a joint estate anyway, so even if the car is in his name, its not his to give away at death, its marital property.  usually a surviving spouse will get 1/2 the estate if there are no children, and a 1/3 if there are.  so if a husband writes a will saying i give $5,000 to my wife and the rest to Uncle Bob, and his part of the estate (after her share of the marital property is deducted) is still 1 million dollars, the court is not going to allow this (provided the wife challenges it)  she'll get 1/2 of that if there are no kids, and 1/3 if there are.  DO REMEMBER, that probate law (what we've been talking about) is state specific, so there are variances from state to state.
649542
Can you track down your sister?  Maybe one of your relatives knows where she is.  I'd probably try to find her first and talk to her about buying her share of the house.  That would probably be the most straightforward and least expensive route.  \n\nPrepare beforehand.  Take the current value of the house.  Divide it in half.  From that half - subtract the mortgage you paid (if she took all the money), half of the taxes you paid and half of the repairs you had done.  Add what you would have paid for rent to live in the house for that time. (Forget the water bills since you used the water.)\n\nThen subtract what you would have paid for rent during that time.\n\nBased on that figure - decide what you're willing to offer to buy her out of the house.  Start on the low side so you have some room to negotiate but be fair.  If you can reach an agreement here it will save a lot of legal fees and hassle.\n\nOtherwise - see a lawyer.  I'm sure a lawyer would be able to advise you on how to use the value of the house to get the repairs done.\n\nI'm not so certain about getting your sister's name removed from the deed.  Your parents wanted her to have half of their home.  While it's your duty to protect your sister's investment by getting the repairs done - it doesn't seem right that you should take her share of the inheritance.
502930
Since your father lived in his home 2 years, he will be allowed an exclusion of $250,000 of capital gain from the sale of his house.  He also qualifies for an exclusion because the sale is due to health reasons (you say he needs to move to assisted living facility). \n\n"A sale will be considered because of health if the primary reason is related to a disease, illness, or injury of a qualified person. If a physician recommends a change in residence for health reasons..."\n\nhttp://www.irs.gov/newsroom/article/0,,id=105042,00.html\n\nSince he qualifies due to medical reasons, if he had lived in the home for less than two years, the exclusion amount could be pro-rated.  The example given in the article:  If he had lived in the home only one year instead of two, his exclusion would be 50% of $250,000 or $125,000 of gain.\n\nHe only has to report gain on his tax return in excess of $250,000.  If he itemizes, he should still include real estate taxes, mortgage interest, and other allowable deductions on his Schedule A.  If he realized a capital loss due to the sale of his home, unfortunately, the loss is not an allowed deduction.
557685
Was that house ever your principal residence in the last 5 years, for 2 years or more?  You get a huge tax savings if it was.  You really need to talk to either a good real estate person or an attorney/CPA and find out the tax consequences.  If it was your principal residence, you do not pay capital gains on the profit you make on the house.  If it wasn't your principal residence for 2 of the last 5 years, you do have to pay profit on the sale.  It can be complicated, you need advice from someone in your area, not a bunch of strangers off the internet.  Good luck!
676586
First of all, you're obviously no dummy if you already own 3 properties.  You've got some good equity and you're selling at the top of the market.\n\nWhat you need to figure out is how much money you're really going to have after you sell the properties.  If you'be been a landlord, I assume that you've been depreciating the properties while you've been renting them.  Well, now you're going to have to pay that all back to the government.  Also, you're going to have to pay capital gains tax on your properties (unless you've lived in one of them for at least 2 of the past 5 years), so there goes more of your equity.  All that affects how much money you'll have to invest, so figure that out.  It's important.\n\nNext, you'll have to figure out what your goals are.  If intend to buy another home to live in when you get to Florida, you're going to have to put some of your money into something fairly liquid for your down payment, like a  money market fund.\n\nI see you're participating in your employer's 401(k) fund.  That's good.  I hope you're contributing up to the maximum match.  Free money is good.\n\nNext, if you're not doing the IRA thing yet, do it.  Whether you choose the traditional or Roth IRA depends on whether you think you'll be in a higher or lower tax bracket when you retire.  Personally, with taxes at a very low point in history and a ballooning federal deficit, I'd bet on tax rates being higher when you retire so if I were you, I'd choose a Roth IRA.  Tax-free growth and withdrawal are good.\n\nIf you've maxed the IRA contribution out, go back to the 401(k).  Tax deductable contributions are good.\n\nFinally, if you still have money left over,  I'd put half into an index fund covering the total US stock market and half in an index fund covering the international market.  Go for no-load funds with low expenses.  I'd recommend looking at Vanguard, T Rowe Price and Fidelity fund families.\n\nIf you really want a good investment, go buy a book on investing so you can decide what makes sense for you. Sure, you could give your money to a financial advisor but how do you know he's not just in it for the fees and commissions he charges you? How do you know his advice is right for you? You need at least a foundation so you can make an informed decision. Frankly, nobody's ever going to care as much about your money as you are, so learn at least enough to know if any advice you're given is any good.  Personally, I like "The Only Investing Guide You'll Ever Need" by Andrew Tobias. It'll give you the basics. Good luck.
665437
Although C Brent is essentially correct about 1031 exchanges... I don't think that he answers your question.\n\nA 1031 exchange is a tax deferred exchange.  This means that when you remove your invested capital from real estate... it will be taxed at your capital gains rate (state, fed & recaptured depreciation).\n\nHere is a link to the capital gains calculator on my site:\nhttp://www.1031store.com/resources/1031_capital_gains_calculator.php\n\nIf on the short term side, you decide to take a little cash out (or portion) of your 1031 exchange proceeds, you will be taxed at your capital gains rate on the portion that you decide to not opt into the exchange.  This is called Boot. (like putting cash in your boot).\nHere is a link to the dictionary on my site:\nhttp://www.1031store.com/resources/dictionary.php\n\nWhen speaking about real estate capital gains,  there are some very good long term effects:\n1. (has to be mentioned) you will be realize compounded growth on your deferred capital gain tax.\n\n2. One of the most over looked advantages, is to move capital from a state where the capital gains tax rate is to another state where the capital gains rate is lower.\n\nLT capital gains rates range from 0% - 12% in different states.  A good example is for an owner who sells property in california (believe 9.3% rate) and buys through a 1031 exchange in TX (0% rate).\n\nThis is where it gets interesting.  Even if you sell the TX property after a year, and realize your gain... you do not owe Cali state tax.  That is tax money saved.\n\nSo in the long run... there can be some real advantages.\n\nI'm going to release this site next week.  You'll be able to contact with experts nationwide and find NNN property to purchase.  Feel free to check it out.  By July 1st, you should be able to contact with some experts too.\nhttp://www.1031store.com
474683
You only pay capital gains on PROFIT, not gross proceeds. If you come out at 0, you dont have to worry about capital gains. \n\nI bought house for $152, sold it at $167, and only paid capital gains on about $5K becuase that was all the profit I made on the deal. \n\nAs long as you keep your paperwork to show that the cash you're getting back is your down payment and not profit (hang onto your original closing statement) then the 1031 exchange is a moot point.
630556
Who is handling the transfer of all the other property if there were any such as the home, furnishing, bank accounts and any other savings, stocks or bonds?\n\nIf there is no probate you should call the insurance company that has the annuity  and find out from them when you will be able to receive our funds.\n\nYou might also check and see if the amount you received has any tax consequences, with a trusted tax advisers that your family or you know.\n\nI hope this has been of some use to you, good luck.\n\n"FIGHT ON"
307881
I'm not familiar with tax law in Missouri (I'm in Canada), but here are some general thoughts:\n\nIn some jurisdictions if you sell your "principle residence" there would be no tax payable.  Because you are keeping the 7 acres and house that probably would not apply.\n\nIn some places "capital gains", which is what you would have here would be taxed at a more advantageous (lower) rate.  Don't know about USA and Missouri in particular.\n\nDefinitely your taxing authorities will have publications you can acquire from their web sites, and no doubt they have staff you can telephone for advice.  I would check these options out before hiring an accountant.\n\nIf necessary, it may be that a knowledgeable accountant is in order.  There may be some ways to negate or defer the taxes that are payable, if any.  For example, it might be an opportunity to get rid of some "dogs" in your investment portfolio (if you have one), and offset your property gains against those losses.\n\nHope these few comments help you out.  Taxes are a terrible thing no matter where you are.