Inherited Rental Property
My sister and I inherited 2 rental properties in NC. this happened 2.5 yrs ago. The houses just got out of probate in July and are officially ours. we will probably sell them but not till next year. Though taxes have been paid on both houses, no income tax has been filed. My brother lived in Europe and had duel citizenship. He never filed taxes in the US that we are aware of. The houses are worth about 140,000 each and are in great shape. what are the tax implications here? when we sell,and right now. I gather we should be making them part of our 2003 tax filings but should we have done this since my brothers death in Jan of 2001?[ Edited by lisswh on Date 08/21/2003 ]
I strongly suggest that you meet with a tax attorney to review what has and has not been done on behalf of the estate so that everything is clean going forward. You and your brother probably received a stepped up basis at the date of death, so your gain will be limited to the increase in value from the date of death. If the properties have been held as rental or investment properties, you might want to consider selling them through a 1031 exchange transaction and acquiring replacement rental property which would allow you to defer the capital gain taxes.
[addsig]
I am not an attorney, the following is my lay opinion.
If the houses just got out of probate in July, then I suspect your ownership started in July. Until then, the houses were still in your brother's estate, with the estate paying the property taxes.
As Bill Exeter points out, if you and your sister sell the houses now, you will most likely not have any capital gains on the sale. If you and your sister pay the property taxes this year, and/or sell the property(ies), then you have something to report on your tax returns. Until then, I don't see a taxable event to report.
Hello,
Would you consider selling the properties now? If so, where are they located?
Matt
Way to go flinny!
houses are in NC and are rented. We are being told they cannot be sold till the leases are up next year, therefore the reason we are waiting to sell. We are in IL
Hello,
I know you are probably busy, but if you have the time, update your profile and include your e-mail, or e-mail me with your address. Maybe we can work out an option to purchase when the leases expire. I can also refer you to some attorneys that are local. I don't know if that will help. Just a thought.
Thanks for your time,
Matt <IMG SRC="images/forum/smilies/icon_smile.gif"> [ Edited by flynny on Date 08/25/2003 ]