If children inherit a deceased parent’s home and sell it, do theyhave to pay capital gains taxes or canthey take a one time sale credit?

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If children inherit a deceased parent’s home and sell it, do theyhave to pay capital gains taxes or canthey take a one time sale credit?

I am the executor. I don’t know what to do. Mom died at 82. Her home is being sold. The proceeds go to her children.

Asked on August 17, 2010 under Estate Planning, Maryland

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I am so sorry for your loss.  I would strongly suggest that you seek help with the filing of the estate tax return from an accountant familiar with estate tax laws. What the tax will be and how it is determined will depend on if the estate sells the property (and it is valued for estate tax purposes) or if it is transferred to the children first and then sold.  Remember, that the property is valued as of the date of death of your Mother, not the date of the purchase by your Mother.  This is a significant difference given the rising cost of property.  What this also means is that if it is transferred and then sold there will most likely be no capital gains tax.  Seek legal help.  The tax laws for estates are changing on a yearly basis.  Good luck.   


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