Do I owe taxes on the profit I made from selling inherited property?

My mother passed away in March 2018. She left me land with right to survivorship. I never planned to move on the property, so the neighbor purchased it from me. My mother paid $50,000 for the property 40 years ago. I received $150,000 for the property. Two CPAs said no tax due because it is inherited. I believe federal and state tax is due on the gain. Do I owe taxes? Do I need to use Form 8949?

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4 days ago

As far as federal taxes go, if your mother was the sole owner of the property her cost basis (the $50,000) would be "stepped-up" to the fair market value of the property on her date-of-death. Assuming you had an appraisal on the property and the date-of-death value was $150,000, this would be your new basis in the land, and you would have no gain to pay taxes on.

However, you mention that you received the property with right of surviroship. It is unclear whether or not you owned the property jointly or not. If the property was held as joint with rights of survivorship, only half the basis would be stepped up. Therefore, your half of the property would have a basis of $25,000 (half of the original $50,000 basis) and your mother's half of the property would be stepped-up to her DOD value, $75,000 (half of the $150,000.) In this case the total basis would be $100,000 and there would be a $50,000 gain you would need to pay tax on.

4 days ago