Archives for March 17, 2019

Are You Penalized for Your Profit? Understanding Capital Gains Tax on Inherited Property

 

It’s been estimated that between 2007 and 2061, nearly 93.6 million Americans will inherit roughly $59 trillion. Of that whopping $59 trillion, a portion of it includes property.

For those fortunate enough to receive an inheritance in the form of a home, you’ll probably think about selling it. However, there will be at least one issue nagging at you. You’ll wonder if Uncle Sam will have his hand in your profit.

If you keep reading, we’ll help you understand if you actually have to pay a capital gains tax on inherited property.

Exactly What Is a Capital Gains Tax?

Simply put, a capital gains tax is the small price you pay to the federal government whenever you sell property of significant value, i.e. a home, for more than you paid for it. Essentially, it’s a tax on the profit you make.

Since we are talking about inherited homes here, the recipient of an inherited home clearly hasn’t paid anything for the property. As such is the case, the government uses the valuation of the home at the time a person inherits the property as the starting point, and what the property eventually sells for to determine the actual profit.

So Will You Have to Poooay Capital Gains Tax on Your Inherited Property?

While it does depend on several factors, there’s a good chance you will wind up owing Uncle Sam something by way of a capital gains tax.

Besides looking at the profit you earn, the government will also look at your tax bracket, your marital status in terms of how you file your taxes, and how long you’ve owned the property.

Say, for example, you’re single with a taxable income around $68,000 a year, and you inherit a house in Nassau County valued at $395,000. If you sell it within a year for $415,000, you’re looking at an estimated capital gains tax as high as $4,400.

In another example, if all of the variables are the same except you’re married filing a joint tax return with a taxable income around $130,000, you’d still be looking at a capital gains tax as high as $4,400.

Are There Ways to Legally Avoid Paying Capital Gains Tax on Inherited Property?

America wouldn’t be America without its loopholes in the tax code. Should you inherit a home and decide to make it your primary residence for at least two years, then you’re looking at an exemption from the capital gains tax—that is, provided you don’t profit more than a set amount and haven’t taken advantage of a previous capital gains exemption for another property within a two-year window.

So You Still Consider Selling If You Have to Pay a Capital Gains Tax?

While the prospect of paying a capital gains tax on inherited property may seem daunting, don’t let it scare you into not selling. When you add up the costs for keeping a house you don’t plan on living in or think about the hassle of converting a home into a rental property, you’ll quickly realize selling is still a great option.

And when you’re looking to sell, make sure you contact us. We can deliver you a cash check for your home within seven days.

What’s It Worth? How to Determine the Value of Your Home

 

The 2018 housing market was a bumpy ride for most home buyers. Prices shot up by 5%, while inventories remained low across the US. Inflation and wages had no chance of keeping up, so buyers had to get creative to get into a home.

But, 2019 is shaping up to be totally different. Inventories are increasing and prices are stabilizing. It’s a changing market with new rules.

Knowing how to determine the value of your home is more important than ever. Buyer’s are gaining ground, and that could mean a lower selling price for you.

But, you may not need to sell to a traditional buyer at all. You’ve got a smart option to consider. You could sell your home for cash.

But to do it right, you’ll need to know what your home is worth.

How to Determine the Value of Your Home

It’s a new year with a new housing market. Including new valuing trends. Learn how to determine the accurate value of your home with these smart tips.

1. Use an Appraiser

To get the best valuation, use a professional. It’s credible and based on the market. In most cases, hiring an appraiser gives you power at the negotiation table.

You will pay around $250 – $450 for the report. But, it’s worth it. It includes accurate pricing based on your home’s condition and location. Plus, you’ll get comparative sales data.

2. Check out Online Tools

If hiring a professional isn’t an option, try one of the many online tools available. You’ll get a reasonable idea of the market value of your home.

Find online home value tools by doing a quick Google search. Many lenders and banks offer them!

Even the government has a calculator tool! Check out the Federal Housing Finance Agency’s HPI Calculator. Type in your state, the purchase and valuation quarters, and the purchase price. The calculator does the rest!

3. Research the Neighborhood

A professional appraisal includes this kind of research. They’re called comps in the real estate business. But, many people who need to sell their homes for cash can’t afford the cost of an appraiser.

That’s ok, you can do the research yourself!

Find recent sales data in public records and online searches. Realtor.com can show you current listing prices. Use Zillow to find out more information about those homes closest to you.

Make sure you’re comparing apples to apples. Look at homes that are the same size and have the same features to get an accurate idea of the value.

Get Cash for your Home, Today!

There’s no need to suffer through the traditional buyer/seller process. It’s not worth the hassle when you need to sell right now. Especially, when you can learn how to determine the value of your home and sell it to a cash buyer.

Use the tips above to negotiate a great price. Then, sell your home for cash, today.

Looking for a cash buyer for your New York home? We can help! Contact us, today.