Date: 11 Apr 2011
Subject: Probate Property Tax Question
I found your site on the internet when doing a google search. Great site.
My wifeís father passed away during 2008. My wife was his sole beneficiary. He had probate estates in California and Nevada.
The Nevada property is rental real estate.
If the Nevada property isnít sold during the probate, will we have to pay capital gains taxes if the property is sold for less than the value when her father passed away in 2008?
Date: 20 May 2011
The property received a new tax basis (cost to determine gain or loss) as of the date of her fatherís death. The tax basis is the fair market value on the date of death. (Internal Revenue Code Section 1014.)
As rental property, your wife can claim depreciation deductions on the rental schedule. The tax basis is reduced for the accumulated depreciation deductions.
Since your wife is the sole beneficiary and executor, any activity of the estates is taxable on her individual income tax return.
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