So after my mom died I put the mobile home in my name and we're about to sell it for 40k it's definitely worth more but my brother and I want it sold rather than keep paying the trailer park lot rent. So we have agreed on a 50/50 split because that is fair. However I am receiving the money and so I have to pay him 20k. How do I do this without being slapped with a tax bill?
How do I split money from the sale of an inherited property without a massive tax bill
byu/askingadentist intax
Posted by askingadentist
7 Comments
Why do you think that you would be slapped with a tax bill?
You are selling the home for less than it is worth, so you would have a capital loss.
You would have to file a gift form 709, but there would be no tax on the $20k that you give your brother.
The property received a “step up” in value when your mom died. That means its basis became the market value at your mom’s date of death. So there is unlikely to be a gain on the sale, and you could claim a capital loss if you sell it for less
Your mother lived there? You get it at a stepped up valuation, so for $40K there should be no Capital Gains tax.
When my mother passed and we sold her house, we had the mortgage company of the buyer issue two checks, one to me and the other to my sister. Simple.
There is no tax on this as everyone agrees
Massive tax bill over these peanuts?
I think there’s potentially two issues where you are misconceiving a potential tax bill:
1) There will be no gain or loss on the sale, so no tax
2) You gifting $20K to your brother is not a taxable event