I own a house with my wife. The purchase price of the house was $1,000,000, and we have owned it for 20 years. Over those 20 years, we have spent $200,000 on capital improvements to the house. All related costs are thoroughly documented.
Let’s say that my wife and I both die, and our unmarried son inherits the house. At the time of inheritance, the house is worth $1,300,000, and that value is thus his initial cost basis. He makes it his primary residence for six years, and then sells it for a net of $1,700,000. He has not spent any money during that time on any capital improvements.
Question: Is his capital gain (before the $250,000 exclusion) $400,000? Or, can he subtract the $200,000 that his parents had spent on capital improvements?
Let’s say that my wife and I both die, and our unmarried son inherits the house. At the time of inheritance, the house is worth $1,300,000, and that value is thus his initial cost basis. He makes it his primary residence for six years, and then sells it for a net of $1,700,000. He has not spent any money during that time on any capital improvements.
Question: Is his capital gain (before the $250,000 exclusion) $400,000? Or, can he subtract the $200,000 that his parents had spent on capital improvements?
Statistics: Posted by jackrabbit14 — Tue Jan 09, 2024 3:12 pm — Replies 2 — Views 187
