Legal Question in Wills and Trusts in California
Mortgage debt on inherited property
My sister-in-law has inherited her mother's house in CA. I understand the basis is the FMV (approx. $240,000) at the time of the mother's death, but there is also a $70,000 mortgage remaining on the house. Is the mortgage figured into the basis of the house, does it decrease the sales price of the house when they sell it, or does it have no effect at all on their gain/loss?
2 Answers from Attorneys
Re: Mortgage debt on inherited property
Answered this in a duplicate post.
Re: Mortgage debt on inherited property
it has no effect on the fair market value of the house. there should be no capital gain as the basis is adjusted upward to the fair market value at the time of death. the basis is something like the amount paid for the house (not the amount of mortgage) plus the amount of any improvements. But remember, the basis will egual the fair market value in this case so there should be no capital gains tax.
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