House Calls: Seller needs clarification on income tax on sale

Q:We would like to move to a senior center in my son’s area. We inherited our home from my wife’s grandmother. It was a family farmhouse. I have no ideawhat it cost. We live ina neighborhood of expensive houses; it should sell for quite a lot. There is nomortgage. Our daughter said we wouldn’t have to pay any income tax if wesell it. That sounds too good to be true.

I wouldn’t even know how to start to figure what our profit would be. Can you give us any direction? — P. I. The tax news is all good. You folks can relax.

A:Your cost basis for the house starts with its value at the time your wife inherited it. You can add to that much ofwhat you’ve spent on permanent improvements over the years.

The good news is a married couple can take up to half amillion dollars in profit on the sale of their home completely free of federal capital gains tax. (It’s half that for a single taxpayer.) The only requirement is that the home has been your principal residence for at least two of the five years before you sell. It sounds as if you qualify.

Q:My parents sold the home I grew up in when my dad had a stroke. I had always dreamed of living there but was too young inmy career to afford it then.

Now that my spouse and I have two kids in the school near there, we’d love to live in that house, and we can afford it. The individual my parents sold the house to has been foreclosed on. I’ll spare you the details, but the house entered foreclosure in 2013 and is now vacant.

The owner has been totally unresponsive to the two brief letters I’ve sent over the years, in which I expressed my interest in working toward a short sale. How can I find out what is going on? Howcan I purchase the property before it goes to someone else? — V. N. A: Put a lawyer on it promptly— onewho specializes in real estate. If your attorney doesn’t have a name to suggest, youmight ask your bankwho handles its real estate business. Do letme knowwhat happens. I’minterested. Q: My husband and I, and our two adult children, own our home as joint tenants with right of survivorship. We understand that if one co-owner dies, the other co-owners automatically inherit the house in equal shares. Do the surviving tenants need to remove the name of the deceased fromthe deed by signing a new deed? If not, what happens when the house is sold and the deceased owners’ names are still on the deed?— askedith.com. A:

Atitle searchwill include the death certificate(s) and make it clearwho the owners are at that point.

Contact Edith Lank at www.askedith.com, at edithlank@aol. comor at 240 Hemingway Drive, Rochester NY 14620.