Q.
My wife and I are retired and are in our seventies. We have two children, and our house is currently worth approximately $300,000. We purchased the property many years ago for $32,000, and currently have a very small mortgage and a $40,000 home equity loan. We are debating on whether to sell the house and take the up-to-$500,000 exclusion of gain or to let our children inherit the house when we pass on.
What are the implications of all of this appreciation on our estate if we do not sell our house before we die. Must my heirs pay tax on the entire appreciation? How is this covered in the Tax Code? A. This is a very complicated issue, and you must seek advice from your tax advisors. It is especially important now that Congress has enacted a major change in the tax laws -- much of which is still under review by the tax experts. You should also discuss your concerns with your children, although the final decision can only be made by you. Oversimplified, the basis of inherited property…
My wife and I are retired and are in our seventies. We have two children, and our house is currently worth approximately $300,000. We purchased the property many years ago for $32,000, and currently have a very small mortgage and a $40,000 home equity loan. We are debating on whether to sell the house and take the up-to-$500,000 exclusion of gain or to let our children inherit the house when we pass on.
What are the implications of all of this appreciation on our estate if we do not sell our house before we die. Must my heirs pay tax on the entire appreciation? How is this covered in the Tax Code? A. This is a very complicated issue, and you must seek advice from your tax advisors. It is especially important now that Congress has enacted a major change in the tax laws -- much of which is still under review by the tax experts. You should also discuss your concerns with your children, although the final decision can only be made by you. Oversimplified, the basis of inherited property…
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