How do I determine the capital gains on the sale of a lake house that was transferred to me due to my husband’s passing if the appraisal used for property taxes is not recent?

by Nathan A. DeFilippi, CPA | Sep 12, 2019
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My husband and I had a lake house that was in husband's name. We did not live there. He passed away in January 2018 and the house transferred to me. I am selling it this month. It is lake-front property. How do I determine how much it was appraised at when he died? Property taxes have not had an updated appraisal for some time. I reduced the selling price to allow for some repairs. I am trying to figure out capital gains. Nothing has changed in the 19 months since he passed.

Often, you can use an assessment of the value at the date of death. The assessed value is the value the local real estate tax assessor places on the property for real estate tax purposes. Many jurisdictions allow for easy-to-use, online searches to find these property values. 

If they haven’t been updated for quite some time, you can compare the most recently assessed amount with similar properties sold around the date of death or properties that were/are for sale around the same locale to see whether the assessed value is in the same ballpark. If the values are comparable, and the estate is small enough that it won’t have any effect on estate taxes, using the assessed value can work because it will broadly reflect the market value for the property at date of death.

If none of the above seems attainable, you can contact the local real estate tax assessor and discuss the property with them. They’ll give you the best alternative route at that point.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Nathan A. DeFilippi, CPA, is a senior tax associate with H2R CPA in Pittsburgh.

Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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