Tax question: determining fair market value for inherited property

[Anonymous]

If you can help, I would appreciate it.

I sold my parents' house in 2013 after their death in October 2009.
My taxes call for fair market value of the home, which I understand to mean the value at the time of my inheritance.
There is a tax assessment from the county in December of 2009 and a higher value dated January 2010.
Does anyone know which of these values I should enter for my taxes? I am unclear about exactly how to determine the value, and wonder if I should use the higher (albeit later) value so as to be closer to the sales price (which was even higher).

I don't have a tax guy, so I am trying to navigate this solo for now, but a little confused about what I read online. Thanks for any assistance.

[Anonymous]

I see this was moved; sorry, I didn't know about this forum category!
(Thanks for not deleting.)

[Anonymous]

Shouldn't you have asked this question in 2009?

[Anonymous]

It is the date of death value of the home, I believe. Not sure if county assessment is good enough for the IRS.

[Anonymous]

didn't you need to know the value of the home to file the estate tax return?

[Anonymous]

Anonymous wrote:Shouldn't you have asked this question in 2009?

My guess is the OP was preoccupied with other things at the time and that 'let me figure out fair market value now so I can determine my taxes when I sell in 4 years' wasn't high on the list.

As to your question OP - I imagine the best route would be to get an honest fair market value at the time of death, rather than using tax assessments which are often below market. And while I haven't done this, it seems the best path to getting such a value would be to use a comparative assessment against homes in the neighborhood that sold near the time of death.

Best of luck to you.

[Anonymous]

I believe that a real estate assessor in the area of your parents' house can do an historical assessment that will hold up for the IRS.

[Anonymous]

Anonymous wrote:I believe that a real estate assessor in the area of your parents' house can do an historical assessment that will hold up for the IRS.

Correct.

If you're selling, you will owe capital gains tax of either 20% or 23.8% (depending on your income) on any gain between the value of the house at the time of their death and the value when you sell.

That is, unless you've lived in the home at any time yourself in two of the last five years.

[Anonymous]

You should have lost money since toy got it at the boom.

[Anonymous]

You should have had it assessed as of date of death - that's your step up basis, no?

[Anonymous]

use a zillow screenshot

[Anonymous]

Anonymous wrote:

Anonymous wrote:I believe that a real estate assessor in the area of your parents' house can do an historical assessment that will hold up for the IRS.

Correct.

If you're selling, you will owe capital gains tax of either 20% or 23.8% (depending on your income) on any gain between the value of the house at the time of their death and the value when you sell.

That is, unless you've lived in the home at any time yourself in two of the last five years.

But she also should have paid inheritance tax on it in 2009.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I believe that a real estate assessor in the area of your parents' house can do an historical assessment that will hold up for the IRS.

Correct.

If you're selling, you will owe capital gains tax of either 20% or 23.8% (depending on your income) on any gain between the value of the house at the time of their death and the value when you sell.

That is, unless you've lived in the home at any time yourself in two of the last five years.

But she also should have paid inheritance tax on it in 2009.

No she wouldn't have. Not federal tax anyway -- she might have owed a state inheritance tax but that depends on the state in which she lives. But there is a step up in basis for real estate, so no tax would have been owed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I believe that a real estate assessor in the area of your parents' house can do an historical assessment that will hold up for the IRS.

Correct.

If you're selling, you will owe capital gains tax of either 20% or 23.8% (depending on your income) on any gain between the value of the house at the time of their death and the value when you sell.

That is, unless you've lived in the home at any time yourself in two of the last five years.

But she also should have paid inheritance tax on it in 2009.

No she wouldn't have. Not federal tax anyway -- she might have owed a state inheritance tax but that depends on the state in which she lives. But there is a step up in basis for real estate, so no tax would have been owed.

but even if she didn't owe anything wouldn't she still have filed an estate tax return where she stated the value of the estate?

[Anonymous]

You need to have it appraised. An appraiser can look at comps from that time period to figure it out, but it will cost you a bit more. However, if you put it on the mark shortly after death then you can presume that the sold price a few months later was Fair market value.