Capital Gains On Inherited Rental/sale
Here's my question: Seller inherits a duplex 5 months ago and is thinking about selling. it has been deeded over to him. He asks me if I am interested in the property. His capital gain is an issue for him. Asking 600K. Remaining mortgage is 280K. I need to estimate his capital gain penalty in order to see if there is an opportunity for me.
Usually the inheritee takes a stepped-up basis at death, meaning that the seller's basis would be the FMV at death of whoever left the property to him.
Assuming the death was five months ago, and assuming that 600k is a market value price, it is likely that his gain will not be that much. In fact, if there has been no appreciation in the last 5 months, he may have no gain.
If he is this concerned, he should ask a tax professional to be sures.