What kind of taxes will be due on this inherited house?

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Q. My sister and I inherited our parents’ house in New Jersey and we are going to sell. Because this is not a primary residence for either of us, we are not eligible for tax exclusion. From my research, I understand that the amount of capital gains will be based on the difference between the fair market value and the actual selling price of the house. Since we are co-owners, our tax payable for this amount will be divided equally. I live in New Jersey and not my sister. How will it work?

– Beneficiary

A. We are sorry to hear about your parents.

The capital gains tax calculation is preferred for inherited homes if you sell relatively quickly after the death of the person who owned it.

Your sister will need to file a non-resident tax return to report her half of any capital gain on the sale, said Michael Karu, a chartered accountant at Levine, Jacobs & Co. in Livingston.

“Assuming she lives in a state with income tax, she should be able to get a corresponding credit for state tax paid out of her resident state income tax,” he said. said. “It is likely that the amounts will not be exactly the same, but should be close.”

On Schedule D of your personal statements, each of you would report “50% of 123 Main St, Anytown, NJ,” he said.

“You would report your half of the sale price and your half of the date of inheritance value plus all carrying costs, such as property taxes, utilities and maintenance, plus all selling costs,” Karu said. “The difference between these two is your profit.”

By the way, he said, you may need to file Form L-9, which is a self-proven waiver, with the State of New Jersey, unless an inheritance tax return no. has been filed.

Email your questions to [email protected].

Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for NJMoneyHelp.com‘s weekly electronic newsletter.



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