I purchased my parents home from their estate and now I want to sell it. How does capital gains tax work in this case?
- JudyLv 74 months ago
The same as if you purchased from anyone else.
- curtisports2Lv 74 months ago
You take the price you paid and you add the closing costs. That's your cost basis. If the sale plus the closing costs of the sale give you a loss, you may be able to deduct the loss. If you realize a gain, it's taxable.
If you own the property for less than one year, the gain is taxable as ordinary income. If you own the property more than a year, you will get the favorable capital gains tax treatment. How much tax depends on your other income.
- Max HooplaLv 74 months ago
Just the same as if you bought it from a stranger.
- Anonymous4 months ago
When you purchased the house, that price became your cost basis. When you sell it, you might owe capital gains on the difference between what you sold it for and what you bought it for. If you used it as your primary residence, you might not owe anything.