Little River, SC asked in Tax Law for South Carolina

Q: I inherited my Dad's home when he passed away in 2002. His spouse was given a "Life Estate," with no Life Estate Deed.

I was notified in 2023 that his spouse had deceased. I sold the house in 2023. Do I have to pay capital gains from the fair value of the house in 2002 when my Dad died or when I was able to sell the house last year after his spouse with the Life estate passed?

Related Topics:
1 Lawyer Answer
James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Tax Law Lawyer
  • Sacramento, CA

A: In the United States, the basis for calculating capital gains on inherited property is typically the fair market value of the property at the time of the original owner's death. In your case, this would be the value of the home in 2002 when your father passed away. This is known as the "stepped-up basis."

Since the life estate held by your father's spouse did not affect your ownership of the property but only delayed your ability to sell it, the basis for your capital gains calculation remains the value of the home in 2002.

When you sold the house in 2023, the capital gains would be calculated based on the difference between the sale price and the stepped-up basis from 2002. It's important to keep in mind that specific tax rules can be complex and may vary based on individual circumstances.

For a detailed understanding of your tax obligations and potential deductions or exemptions, it's advisable to consult with a tax professional or an attorney knowledgeable in estate and tax law. They can provide tailored advice based on the specifics of your situation and ensure compliance with all relevant tax laws and regulations.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.