Real Estate Analysis and Commentary in [CITY]

Has your spouse passed away
January 20th, 2017 11:57 AM

If you refer to the rules of the IRS, you will note that you are potentially able to put more money in your pocket versus the government's if you follow the  IRS rules on Date of Death Appraisal for Residential Property.   It is highly suggested that you check with your accountant, but instead of just have an individual capital gain exclusion of $250,000 dollars as an individual, you may be able to bring up the tax basis of your home by having a retrospective appraisal completed.   

For example:(Simplified)  Your spouse and you purchased your home 20 years ago at a value of $100,000. Your spouse passed away in 2010 at the high of the market, and at that time the home was worth $1,000,000 dollars.   You are now ready to sell, and in 2017, your realtor has estimated that your home is worth $850,000, and you were not really involved in the finances, so you have minimal records of the improvements you've made over 20 years.   If you have a retrospective appraisal completed by a licensed residential appraiser for the date of death in 2010, and it shows the value was a $1,000,000.  You will save yourself the capital gains taxes of the $500,000 dollars, due to the step up in value that your accountant can claim based on the date of death.   Instead of paying taxes on( $850,000 less $350,000 ($250,000 dollar exclusion plus Original Purchase price) = $550,000)  You may be only be responsible
for taxes on  ($850,000 less (550,000+250,000)  or $50,000.   This example is simplified for example purposes only.  

Pamela Evans, MBA, License Appraiser  Residential Appraisal

Posted by Pamela Evans on January 20th, 2017 11:57 AMPost a Comment

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