Removing Asbestos Siding Cost
How can we reduce the capital gains tax on an inheritance without receipts?
We are the beneficiary’s of a home sale left in Trust. The home was purchased for only $35,000 and sold for $146,500. There are no receipts for any of the improvements, but there are 3, very obvious improvements made: the old asbestos siding was removed and vinyl installed, a 2nd full bath was added and the garage was completely rebuilt. Is there any way to obtain an estimated cost of these improvements and use them as deductions against the capital gains tax without showing receipts?
When you inherit property, you receive a “stepped up” basis in the property. That means that your basis cost is the value of the property on the date of the death of the benefactor. If the benefactor paid $35K for the house but the house is worth $150K on their date of death then your stepped up basis is $150K. Generally, if the property is sold within 6 months of the death then the IRS says that their is no Capital Gain and therefore no Capital Gains Tax. You don’t need any receipts and the money from the sale is not liable for any income tax since it is inheritance (non Federal taxable) and not income (which is Federal taxable). You will need to check if you will owe state Inheritance Tax on the money. Some states, like New Jersey, have an Inheritance Tax while most states, like California, do not. Check with your tax advisor in your state.
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