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Have you inherited a house in Spartanburg, South Carolina and need to understand the tax consequences of selling that home? The information below will help you calculate basis, understand your gains and losses, and address reporting for a sale.
Before thinking about the tax consequences, you’ll want to start with calculating the basis of the home. The basis is how much the property is worth in the current market value. Even if you have inherited a home that was initially purchased over several decades before at a much lower cost, the basis (or how much the home will be worth) will be the market-value costs at the time of their passing. This is the amount that you will use to calculate capital gains.
Now that you have figured out your basis, let’s talk about capital gains and losses. Any money you earn (or gain) or lose from the home sale (included any assets within or tied to the home such as furniture and other possessions) that is later used for personal or investment purposes is referred to as Capital gains or losses on your income tax. Those who hold on to the inheritance for at least one year, are eligible to apply for lower rates of long-term capital gains so that is certainly something to consider as you think about your options.
Regardless of having the property for short or long term, you’ll want to report the capital gains for income tax once the sale is final. To do that, simply take the total sale value and subtract it the basis value we started with.
A few things to keep in mind with an inherited home in Spartanburg, South Carolina: