When you inherit property through either a will or other method such as a gift, you will be responsible for the taxes. There are many different tax consequences that result form selling property that you have inherited.
It is important to be aware of these concequences before you complete the sale. This will help you make sure that you can provide yourself with a quality sale, you get as much out of the sale as possible, and that you provide yourself with the right tax bracket.
The basic rule is that the recipient’s basis for inherited property is stepped up from the benefactor’s cost to the asset’s fair market value at the time of death. For instance, if a person inherits property worth $10,000 and it appreciates to a value of $20,000 at the time of sale, the owner will be taxed on the gain of any appreciation of the property. The appreciation in value between $10,000 and $20,000 will not be recognized for income tax purposes. Gifts are calculated for purposes of gain or loss.
When an asset that was transferred as a gift depreciates to a value below the donor’s original cost, the recipient’s basis is the fair market value of the asset at the time the gift was received. If the recipient’s selling price is higher than the asset’s value on the date of the gift but lower than the donor’s cost basis, the recipient will have neither a gain nor a loss.
Once properties have been transferred, you are responsible for that property, along with any of the fees that the property might have had. Therefore, you won’t be able to change the way the taxes work with the particular property that you have been given through inheritance.
The taxes that you pay on inherited property are going to depend on several factors. First, the taxes are going to depend location of the property.(city, state, and county.) After you have inherited the property, you’ll want to contact the city, state, and county to make sure that the property is in the right tax bracket.
The second factor that taxes on inherited properties are going to rely on is the particular type of business you have on the property and on what the property has been zoned for. For instance, when you are looking at a business that has been zoned as a sales business, or as a particular type of establishment, you are going to want to then think about the type of taxes that will be applied.
One you’ve owned the inherited property, it is then yours, and the taxes are going to be exactly the same as they would have been had you owned the property all along.