Legal Question in Wills and Trusts in Virginia

Re: Amending inventory

There are two issues presented: whether you can amend an inventory after "the estate has been finalized", and whether amending the inventory will help you avoid capital gains tax on the sale of the residence left to you.

It may not be necessary to answer the first question, depending on the facts of your inheriting the residence. If you live in the residence, and meet or can get excused from the two year use test, you will avoid any tax on the first $250,000 of gain ($500,000 if you are married and file a joint return.) You infer you have not lived in the residence for two years; if you inherited the property from your deceased spouse, you will be considered as owning and living in the home for the same period as the spouse. If that doesn't work, you may be able to get the IRS to grant hardship relief on the two year question; depends on the facts, the relief is available if the test is not met because of a change in place of employment, health reasons, or unforseen circunstances. Only if you are not eligible for avoidance of the gain on sale do you need to address the first question of valuation.

If the final accounting has not been filed, you can amend the inventory; you would be wise to have a date of death professional appraisal on the property to support your change in valuation. If the final accounting has been filed, you may be able to get the Commissioner of Accounts to allow you to reopen the probate.

After evaluating how much trouble all that may be, you will want to ask yourself if it makes morsense to just wait until you have met the two year test, then sell, assuming you are using the home as your principal residence.

Re: Amending inventory

Check with the Commissioner of Accounts assigned to oversee the probate of your decedent's estate.

Re: Amending inventory

I don't see any reason why you can't amend it.

Why would you incur capital gain, if the house

was not actually sold? You pay capital gains

only upon the actual sale of the house.

I would ahve to check my tax law, but I believe

the heirs receive the house with a tax basis of

the fair market value at death. So amending

the inventory would actually mean the heirs

would pay LESS capital gains when (if) you sell

the house.

The estate would not owe any capital gains if

it did not sell the house.

And if it did sell the house, the actual sales

value, not the estimated value, is used for

capital gains.

Actually, I think the reverse is true.