Tax Implications of Selling a San Diego House I Have Inherited

If you have inherited a San Diego house there are many things to consider, including tax implications. Many people who have inherited a home simply don’t know what steps to take, and there are many! If you have inherited a home or have a share in the inheritance, it can be complicated and emotional process. At Trusted House Buyers, we are here to offer the simplest and fastest solution to selling an inherited home so you can move on. Let’s get into it!

What is an Inheritance Tax?

You may be wondering what an inheritance tax is in the first place and how it affects your San Diego property that you have inherited. explains, “Like the majority of states, there is no inheritance tax in California. If you are getting money from a relative who lived in another state, though, make sure you check out that state’s laws.” This may seem simple enough, but it get’s more complicated from here. let’s us know that, “The only time you have to include inheritance as income in California is when your inheritance makes you money. The money you make becomes income. For example, if you received $100,000 in cash as a gift or as an inheritance, you would not claim the $100,000 as income. If that money made $100 in interest, then you would claim the $100 only as income. Here’s a closer look at what that means.”

How Many Taxes Will You Owe?

Let’s remember that as we noted above, you usually aren’t taxed until you sell the property. And at that point, you will pay capital gains based off the profit you have made. This is called a step-up cost basis. Furthermore, Investopia explain, “Step-up in basis refers to the adjustment in the cost basis of an inherited asset to its fair market value on the date of the decedent’s death. Cost basis is what determines the taxes owed, if any, when the asset is sold. Cost basis starts with the price paid for an asset, plus any additional costs added over time to improve or maintain the original asset.”

Capital Gains and Capital Losses

How much profit or loss you have experienced in the sale of your inherited home in San Diego are also called the capital gains or losses. If there was a loss, you won’t owe any income tax on the inherited property. On the flip side, if there was a profit, you will be taxed on the proceeds of the sale according to how long you have owned the property. You do have some options if you don’t want to avoid capital gains taxes on your inherited San Diego property:

  • Live in the House: You can chose to live in the house and if you do (for at least 2 years), you do not need to pay capital gains taxes. This sounds like a good option, but if the property is not in good shape and needs repairs and renovations, living in the home may not be a viable option.
  • Rent out the House: Another option to bypass capital gains taxes is to rent the home. In theory, renting a home seems like a great idea. You don’t need to move in and you can turn a profit. However, beware of the pitfalls of property rentals, especially ones that need work. Afterall, you eventually want to sell this home and renters may not treat this financial asset as well as you would.
  • Sell the Property “As-Is”: Selling the home to a cash buyer investor, like Trusted House Buyers, means that we will buy your inherited home, in the condition that it is in today. That means you will not need to worry about spending money on repairing or renovating the home.

Choosing Trusted House Buyers

If you have inherited a property in San Diego, we understand you have a lot of options to consider and it can seem overwhelming. We also know there are many “cash buyers” in San Diego to choose from. Working with Trusted House Buyers is working with a family run business right here in San Diego. We do not treat our clients like a number, but rather, walk through every step of the process with our sellers so they feel good about the transaction long after closing. We understand that each situation is unique and when dealing with an inherited home, it can be a very sensitive situation! We are here to offer a fast, simple, and stress-free option to sell your inherited property so you don’t need to worry about the tax implications, costly renovations, and repairs. Give us a call today at 619-786-0973 to see how we can help you and your inherited San Diego home!

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