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Tax Question for a Succession Property
Posted on 11/9/23 at 7:09 pm
Posted on 11/9/23 at 7:09 pm
Succession property appraises for $250,000.
After deeper inspections, property needs $25,000 in repairs.
Heir 1 wants to buy the property, but at a discounted price.
Heir 2 agrees to sell the property to Heir 1 for $110,500.
Can Heir 2 claim a loss?
Yes, Heir 2 will most certainly consult a CPA, but is curious what the board thinks.
After deeper inspections, property needs $25,000 in repairs.
Heir 1 wants to buy the property, but at a discounted price.
Heir 2 agrees to sell the property to Heir 1 for $110,500.
Can Heir 2 claim a loss?
Yes, Heir 2 will most certainly consult a CPA, but is curious what the board thinks.
3
Posted on 11/10/23 at 9:57 am to DRock88
I believe it's considered a Long Term Loss. We bought my wife's grandparents house from her mother/aunt, and her mother was/is able to take a $3000 loss per year until the loss is fully realized. This was back in 2016- I believe the house was appraised for $150,000 and we paid $85,000, so she was able to claim a $32,500 loss, or roughly 10 years of long term losses.
I file her taxes now, but this was originally set up by a CPA
I file her taxes now, but this was originally set up by a CPA
Posted on 11/10/23 at 2:32 pm to DRock88
Assuming the property was appraised in a timely manner the basis of the property will be stepped up to 250k. Heir 1 and Heir 2 individual basis would be 125k each.
Needing 25k in repairs doesn't have any bearings on the appraised value / stepped up basis.
I believe Heir 2 can sell his/her half to heir 1 and claim a loss of 14,500 on sale of asset.
other poster is correct, inherited property like this is taxed at long term capital gain rates.
Consult CPA.
Needing 25k in repairs doesn't have any bearings on the appraised value / stepped up basis.
I believe Heir 2 can sell his/her half to heir 1 and claim a loss of 14,500 on sale of asset.
other poster is correct, inherited property like this is taxed at long term capital gain rates.
Consult CPA.
This post was edited on 11/10/23 at 2:34 pm
Posted on 11/10/23 at 6:20 pm to DRock88
Related party rules baw.
If the two heirs are related, the loss will be suspended until the other heir sells the property in a non-related party transaction. Worse, the original loss heir can never claim the loss, but the buyer heir can upon the eventual sale.
WHo is a related party? An individual and his or her spouse, brothers and sisters, parents, children, grandparents, or grandchildren.
So Heir 2 never gets to take the loss. Heir 1 can take the loss that Heir 2 didn't get to take, when Heir 1 sells the property to a non-related person.
If the two heirs are related, the loss will be suspended until the other heir sells the property in a non-related party transaction. Worse, the original loss heir can never claim the loss, but the buyer heir can upon the eventual sale.
WHo is a related party? An individual and his or her spouse, brothers and sisters, parents, children, grandparents, or grandchildren.
So Heir 2 never gets to take the loss. Heir 1 can take the loss that Heir 2 didn't get to take, when Heir 1 sells the property to a non-related person.
This post was edited on 11/10/23 at 6:24 pm
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