I own a home. When I die, do I (heirs) have to pay Capital Gains tax?
- SlickterpLv 78 months ago
Possibly, yes. Depends on many factors.
- curtisports2Lv 78 months ago
Only if they keep it for any significant period of time after your death and the value of it rises above its value at your death. No matter what you paid for it, at your death its cost basis automatically is stepped up to its market value at your death. Whoever you name as executor should have the property appraised as soon as possible if the plan is not to sell it as soon as possible.
- Anonymous8 months ago
They will not owe any capital gains tax on the house when you die.
The other anonymous is correct that they will get a stepped up cost-basis when you die. Meaning if you bought the house for 100k and it is worth 400k on the day you die, the cost basis for your heirs is now 400k.
And then the other anonymous goes off the rails a bit. Capital gain exemption on one's primary residence is 250k (single) or 500k (married). So they can sell right away and have no CG tax since their gain is zero or they can live in it and sell it in the future for up to 650k (single) or 900k (married) and still have no CG tax.
Whether your estate will owe federal estate tax or your heirs will owe state inheritance tax depends on a variety of factors such as how large your estate is, what state you live in and what your estate plans are. Unless Congress lets the new estate tax law expire, very few estates will have to pay estate tax. As far as state inheritance tax goes, there are only six states that have such a tax and the exclusion amounts are probably higher than what your house is worth (although we do not know if you have other assets to disburse as well).
Anyone (like John) who asks what cost basis has to do with inheritance or capital gains tax is clueless.
- Anonymous8 months ago
Unlikely. Your heirs will get a stepped up basis. They would only owe tax on any additional gains from the increase in value from your date of death to when they sold it.
- What do you think of the answers? You can sign in to give your opinion on the answer.
- JohnLv 68 months ago
No, your heirs have to pay inheritance tax which is more than a tidy sum. When I was in the stock market I had to hire a taxman to figure out my capital gains tax. When I became owner of EAC I had to hire a CPA to change it from type S to type C corporation. It never ends.
- JudyLv 78 months ago
- Wayne ZLv 78 months ago
With taxes, the answer is almost always "maybe".