Posted by Jimmy on June 06, 2005 at 09:36:41:
dealmaker’s answer is almost perfect. The real answer depends on how your mom and dad took title back in 1991.
I believe Florida is a community property state. if they were smart enough to title the property as “mom and dad as community property,” your mom will get a full step-up in basis (not just on dad’s half). That comes from Section 1014(b)(6) of the Internal Reveune Code.
Even if they did not formaly title the property as CP, Florida law might presume it to be CP. This happens in California and TX all the time. depends on the facts. and do not know Florida law. ask a local tax guy.
capital gains - Posted by Bill H
Posted by Bill H on June 05, 2005 at 17:15:27:
My mother in law and father in law purchased their condo in fla. in 1991 for 80k. my father in law passed away in april last year 2004, and she has recieved sole ownership. if she were to sale how much would she pay in capital gains or what percentage would she pay ? would she pay on the purchase price of 80k or would she pay on what it was worth when she took sole ownership at time of passing, if so how would she find out how much property was worth at time of passing, and also what % of gains would she pay. she has asked a few people on this and nobody knows.last year the condos were selling around 250k this year around 300k. any help is greatly appriciated.
Re: capital gains - Posted by dealmaker
Posted by dealmaker on June 05, 2005 at 19:48:39:
OK, I’m not a CPA, but I’ve been down thir road with my Mom’s house. I’m assuming this was their residence, which MAY make a difference in a minute.
When he died, she received a STEP UP in basis. That is, her basis is whatever it was worth when he passed, on HIS HALF. At purchase, she owned 1/2 or $40K, let’s say that whe he died it was worth $200K, her basis would be ($100K of his, plus $40K of hers) $140K.
That basis would be adjusted upward by any CAPITAL IMPROVEMENTS. So if she sold it for, let’s say $300K and had SELLING EXPENSES AND COMMISSIONS of $25K, her NET PROCEEDS would be $275K, for a gain of $135K.
As long as she has lived there for 2 of the last 5 years there is NO TAX on the first $250K in profits, so she is in good shape regardless!
dealmaker