Legal Question in Tax Law in California

Re: capital gains tax

Your capital gains tax is calculated from your "basis" in the property (i.e. what it was worth when you acquired it). If you buy rental property for $100,000 and sell it for $400,000, your "basis" is $100,000 and the taxable gain is $300,000. The mortgage does not figure into the calculation.

The good news is that when you inherit property, you generally receive a "step up" in basis without any tax consequences. In other words, your basis in the property is calculated based on the fair market value when you inheritted the property.

You should see a CPA or a tax attorney for more details.

Re: capital gains tax

if the property was an inheritance it is possible that the income tax basis was stepped up to fair market value at the date of death. you will also need to have title to the property, through probate or if a trust was used by actions of the trustee. you will need to retain a CPA or tax attorney.