Inherited a House? Expert Says CPA's Tax Advice Is Wrong

If you've inherited a house, you might be getting bad advice about taxes.

A reader asked financial expert Quentin Fottrell about their CPA's (tax accountant's) claim that they must sell an inherited house within 6-12 months to avoid capital gains tax (tax on profit from selling property). The expert's response? This advice is completely wrong.

Here's what you actually need to know about inherited property:

• There's no time limit - Federal law doesn't require you to sell inherited property within any specific timeframe • Step-up in basis - When you inherit property, its value "steps up" to the current market price at the time of death • No tax on no profit - If you sell for the same price as when you inherited it, you pay zero capital gains tax

For example: If someone bought a house for $200,000 and it's worth $500,000 when they die, you inherit it at the $500,000 value. If you sell it for $500,000 (even years later), you owe no capital gains tax because you made no profit.

The mortgage on the house doesn't affect your taxes - it just reduces how much money you receive after the sale.

Bottom line: If your tax advisor tells you to rush selling inherited property, get a second opinion. There's no federal deadline, and waiting won't automatically trigger taxes.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/i-inherited-a-house-my-cpa-says-i-should-sell-within-a-year-to-avoid-capital-gains-is-he-right-d0909486?mod=mw_rss_topstories