If you inherit a property and want to sell it, the last thing you want is to incur taxes. Under tax law, selling an inherited home doesn’t qualify for the home sale tax exclusion – but there is another solution that can exclude you from paying sales tax on an inherited home. Here’s some insight from cash home buyers in Dallas.
What is the Home Sale Tax Exclusion?
When you sell your home, any profit for the sale is considered to be income, which means that it is subject to taxation. Although Texas doesn’t have income tax, the state may tax you on your property sale by up to 20%. This means that selling a home for $250,000 could trigger a $50,000 capital gains tax payment. Capital gains is based on how much the home was originally purchased for, and if it has gained in value then you are taxed on that value.
The home sale tax exclusion is designed to give some relief on this by allowing you to exclude up to $250,000 of the gain (profit) from a sale as a single homeowner. As a married homeowner, this is doubled to $500,000.
Why Doesn’t It Apply to Inherited Property?
Inherited property is not considered for the home sale tax exclusion because it is not considered to be your primary home. For this exclusion to apply, you would have to live full-time in the property for at least two years.
What is the Solution?
The solution is in the stepped-up basis rule. The basis is what the home is worth for property tax purposes, and it includes the price you paid for the home as well as the cost of improvements. A stepped-up basis means that the basis is moved up to current fair market prices rather than the original basis of the property.
If you inherit a house, you automatically receive a stepped-up basis. This means that the home’s cost is no longer what the previous owner paid for it but is now the fair market value at that the time at which they passed away. As a result, you’d only pay capital gains tax on any increase in market value since the owner’s passing.
For example, if your grandparent paid $100,000 for their home 25 years ago and you inherit it, it will be appraised at the current market value, say $300,000. If you want to sell the home and get a final selling price of $310,000, then the taxable gain is only $10,000. In this example, you’d only pay up to $2,000 in capital gains tax. If the house sells for less, say $290,000, then you have a capital loss of which $3,000 can be deducted against your ordinary income.
This means that selling an inherited home can have minimal tax implications, even though the home sale tax exclusion doesn’t apply.
Considering Selling an Inherited Home in Dallas? We Will Buy Your Home in 24 Hours
If you want the best way of selling inherited property in Dallas, then we are here to help. Our team of cash home buyers work to make this process easy for our clients by simplifying the selling process and handling it all for you, from clearing out the property to selling it as is, taking a load off your shoulders.
If you want to sell property fast without the hassle of looking for a buyer, dealing with real estate agent, or even emptying the home, then the best option is to sell directly to cash home buyers in Dallas.
We can sell your home in 24 hours. Here’s how our process works:
- You enter your information on our website. We’ll contact you directly to discuss an offer for your property (you can also get a free property evaluation from our website)
- You can accept or reject the FREE NO-OBLIGATION offer
- Cash will be deposited into your bank account – with no real estate agent fees
- We can handle all aspects of the process, including clearing out the home
- You can also call us directly on 469-858-008
That’s all there is to it!
You can also download our FREE eBook for more information on how to sell your home in 24 hours.
Our team is compassionate and highly motivated to offer you the best possible market-related price for your home, so you can sell your home in 24 hours. This cash will go straight into your bank account as soon as the sale goes through. You also pay zero real estate agent commission.
At Shiny Key Properties, our trained consultants have years of experience in assisting local and out-of-state homeowners sell an inherited home. To find out more about our cash for homes Dallas services for selling inherited property, please contact us today.