Inherited Property And Taxable Gains

I have come into contact with a person who recently inherited a home from his dad (recently passed away). In discussing the situation, he is interested in selling but told me he wants to rent the property for a year so that he pays less taxes.
Correct me if I'm wrong please, but MY understanding is that your basis in a property is whatever the FMV is at the time of your inheritance. So let's suppose this property is worth $200k, and he's done a little work to it already (had it painted, etc., nothing major), but is willing to sell it to me for $150k. Even though it hasn't been a year, he is not "making" a gain because his basis is more than what he would be selling for, so therefore no tax liability. Am I correct?
I have a call into my accountant, but it's tax season ya' know, so who knows how long it will take for him to call me back.
Thanks.

Comments(1)

  • telemon12th February, 2004

    You are basically correct.

    When you inherit an asset, it is yours, free and clear. All taxes are paid on it as part of the probate proceedings.

    If the value of the property was 200k in the estate and he sells it for 150k, he actually has a taxable LOSS.
    [addsig]

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