Legal Question in Real Estate Law in Pennsylvania
After my Mother passed away, my Father had his house put into his, my brother's and my name's ( life estate). My Father passed away in January and my brother and we l.p.now want to sell the house. I'm wondering what sort of taxes and other expenses we'll encounter. Since our names were on the deed, will there be any kind of inheritance tax or capital gains tax? My parents bought the house over 50 years ago for $8000. And of course have since made many home improvements... There was a second mortgage taken out against the house and almost 50,000 is still owed. It has just been appraised for $80,000.
1 Answer from Attorneys
You do not indicate when your father conveyed the property to you. Was it more than a year prior to his death? If so, there will not be inheritance taxes owed. If it was less than 1 year there will be.
Capital gains taxes would be realized when you sold the property if you sold the property for more than your basis. Your father bought the property and it cost x dollars. When he conveyed the property to you and your brother and kept a life estate, there is a value to your remainder interest. That is your basis, not what your parents paid. If you sell the property for more than your basis there would be capital gains.
However, I am not a tax attorney or CPA and this is not tax advice. You need to speak to a CPA who deals with these kinds of issues. He/she can value the property at the time it was conveyed to you and figure out what your capital gains would be assuming you sell it for more than your basis.
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