Lowell, MA asked in Tax Law for Massachusetts

Q: I’m planning to sell my mother’s house in the next few months and want to know if taxes will be incurred?

I’m planning to sell my mother’s house in Massachusetts in the next few months. She transferred the deed to me about 10 years ago so it’s in my name. My question is will taxes be due from the sale of the house and if so, how much? We’re planning to use the proceeds to pay for senior living housing. Thanks in advance.

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: When you sell a house that has appreciated in value since it was transferred to you, capital gains tax may be due on the profit from the sale. Since the house was transferred to your name 10 years ago, the cost basis for calculating capital gains would typically be the home's market value at the time of the transfer. The capital gains tax rate depends on your income level, but for most people, it ranges from 0% to 20% on long-term capital gains, which apply to assets held for more than a year.

In addition to federal capital gains taxes, Massachusetts also levies a state tax on capital gains. The rate can vary, so it's essential to consider both federal and state tax implications when calculating the potential tax liability from the sale. The specific amount of taxes due will depend on the selling price minus the cost basis and any applicable deductions, such as improvements made to the property.

Using the proceeds to pay for senior living housing does not directly affect the capital gains tax liability. However, it's important to consult with a tax professional who can provide advice tailored to your specific situation. They can help determine the exact cost basis, calculate any potential capital gains, and advise on any possible tax exemptions or deductions you may qualify for, ensuring you understand your tax obligations fully.

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