Do I pay capital gain tax for an inheritance property from my late husband and we want to sell? 6 Answers as of December 26, 2013

I married my late husband on October 2007. He passed in October 2011. I inherited our property in early 2012 and got married to my current husband in November 2012. In February 2013, we rented it out and now willing to sell it with my current husband in March of 2014. I have been living in the house before we got married with my late husband in 2003. He built the house in 1948, he renovated in 1952, and several improvements years after. We live here in CA. The property is listed approximately around $650,000 today. Will we have to pay Capital Gain Tax of some sort after the sale? We are looking to buy a new home once we sell this home. Please help! Thanks in Advance.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
LAW OFFICE OF ROBERT I LONG
LAW OFFICE OF ROBERT I LONG | Robert I. Long
You probably received a free step-up in basis in October 2011, meaning the only capital gains taxes you face would be for any increase in value from after October 2011 to the date of sale. You should pay for an appraisal as of October 2011 to support your position. Also, unless you added your most recent husband onto title, you are sole owner of the property as your separate property, barring any comingling issues. If you plan on buying a replacement property for less than the sale price in the same California county or in a county with reciprocity, you may be eligible to roll-over your property tax basis. You really should consult a CPA familiar with these tax issues to advise you before you miss out on an opportunity to save many thousands of dollars, now and in the future.
Answer Applies to: California
Replied: 12/26/2013
Law Offices of George H. Shers | George H. Shers
Since you are in California, when your husband died you would have inherited [by probate or joint tenancy with the right of survivorship] his half of the property with that half being adjusted to the current value of the house. If you have lived in the house for two of the last five years then you can sell the house and have the first $500,000 of capital gains not taxed by the State. It sound as though you might not qualify. It would be worthwhile to spend an hour with a tax attorney to discuss the facts and law; certainly you should buy one of the popular lay person books on taxes.
Answer Applies to: California
Replied: 12/17/2013
Law Ofices of Edwin K. Niles | Edwin K. Niles
Your tax basis is the value on the date of inheritance. If it's worth more now your gain tax would be based on the difference.
Answer Applies to: California
Replied: 12/17/2013
Law Office Of Victor Waid
Law Office Of Victor Waid | Victor Waid
Obtain the services of a tax accountant to properly advise you, and an estate attorney to assist you in the disposition of the property.
Answer Applies to: California
Replied: 12/17/2013
Neal M. Rimer, Esquire
Neal M. Rimer, Esquire | Neal M. Rimer
The tax basis of the house is stepped up as of your husband's date of death. Depending on how title was held, either 1/2 or the whole of the property gets the step up. Did you get an appraisal of the property as of your husband's date of death? Was title in both names as community property? Was it in a trust? Was it in joint tenancy? Also, a married couple are entitled to a $500,000 exemption upon the sale of the principal residence, assuming your prior living in the residence will allow you to qualify. It is also important for you to continue with your low property tax, which, if done correctly from the sale to the purchase of a new house will work out for you. I'm guessing that you will not have any tax to pay, but, you need to retain an attorney and get to the details and the facts to really know.
Answer Applies to: California
Replied: 12/17/2013
    James Law Group
    James Law Group | Christine James
    It depends upon how you held title with your husband, whether you got a full step up in basis in 2011 and the value at his death, and how big your gain will be. Speak with an accountant to run the numbers.
    Answer Applies to: California
    Replied: 12/17/2013
Click to View More Answers: