Posted on: 04th Apr, 2010 05:55 am
I inherited a house and lot in Jan.2005. I rented it out until Hurricaine Ike destroyed the house in Sept. 2008. I sold the vacant lot in March 2009 for $4350 more than the property tax appraised amount. Is the $4350 a capital gain? ordinary income?
To Guest,
Since you inherited the property, your cost basis is equal to the value of the property at the time of the death of the person who gave you the property. If you have done any improvements to the property or spend money on advertising, realtor commission, etc. to sell the property, the costs would be added to get the cost basis. The difference between the sale price and the cost basis is the amount of your capital gains. If you have sold the property say for $5000 and the cost basis of the property is $3000, the amount of capital gains would be ($5000- $3000) or $2000.
Since you inherited the property, your cost basis is equal to the value of the property at the time of the death of the person who gave you the property. If you have done any improvements to the property or spend money on advertising, realtor commission, etc. to sell the property, the costs would be added to get the cost basis. The difference between the sale price and the cost basis is the amount of your capital gains. If you have sold the property say for $5000 and the cost basis of the property is $3000, the amount of capital gains would be ($5000- $3000) or $2000.