Did you just inherit a home? It might feel like a windfall at first, but paying taxes on an inherited property can be pretty tricky.
For example, do you still get a tax credit up to $250,000? Can a capital loss be deducted if the home sells for less than market value? If you’ve never dealt with a situation like this before, it’s probably a little overwhelming.
At Mitten Made Properties, we’ve worked with lots of people in Metro Detroit who were in the same boat, and here are a few things that could help you along the way.
There’s no home sale tax exclusion.
Typically, a seller would be able to deduct up to $250,000 in taxes on the sale of their home. But that’s only on a primary residence. So it only applies to an inherited home if you live in it and use it as your primary residence for two years.
You’ll benefit from stepped-up basis rules.
The good news is that “stepped-up basis” rules consider the home’s value as being its fair market value at the time of the owner’s death. This is almost always a higher number than the actual sale price. This can work in your favor at tax time if the property is sold, because if you sell for less than the stepped-up basis, you’ll have technically taken a “loss.”
You can deduct up to $3,000 per year for losses.
Any loss that is taken on the sale of your inherited property can be deducted from your taxes. A “loss” occurs when the property is sold for less than its fair market value, even if you didn’t technically lose money out of your pocket. However, you can only deduct up to $3,000 per year.
There’s a stress-free way to sell your inherited property.
If you just want to sell your inherited home quickly, as-is, for cash, get in touch with Mitten Made Properties. We can close in as little as two weeks, we’ll pay all closing costs, we don’t require an inspection, and the best part is… You don’t even have to clean it out.
Give us a call at (248) 883-3340 to find out how we can help you turn your inherited property into cash fast.