Do I have to file a state tax return and/or pay taxes on the sale of a home that I inherited from mother?
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Do I have to file a state tax return and/or pay taxes on the sale of a home that I inherited from mother?
Mom lived in IA and died in 11/10. Mom bought home a 1-1/2 years prior for $458,500. I live out-of-state and haven’t lived in IA for over 20 years. There was a Will and probate; all creditors paid off. Estate under 750,000. I inherited the home and sold it 5 months later in 03/10 for $455,500 (court deeded to me; I quit claimed to buyers; both occured same day). After paying off the mortgage and costs of sale, I ended up with a little over $100,000. Tax appraised value on the home (if that matters) was about 20K more than what I sold it for. I’ll report it on federal, but what about IA?
Asked on November 24, 2010 under Estate Planning, Iowa
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
You have to report income on both your state and federal returns. But there seems to be a few steps here that you have left out to make an assessment of what happened. Was the mortgage paid off? Was it sold in a short sale? You need to have the documentation reviewed by an accountant here and to ask him or her what needs to be done. Generally speaking the estate pays the taxes on the property when it is part of the estate. It might have been better to have the estate sell the property and then pay all taxes and then have you reap the rewards. But without really seeing what was done here it is hard to answer this. Good luck.
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