Do You Pay Capital Gains Tax on Land That Was Bequeathed to You?


Quick Answer

Capital gains tax may be applied to inherited property sold for more than its basis once it is sold according to Zacks.com. A property's basis is usually the value on the date of the death of the person who bequeathed it.

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Full Answer

However, selling inherited land for more than the basis is not taxed as a capital gain if one of two exceptions apply according to Zacks.com. If the property was rented out, any depreciation claimed is taxed as ordinary income. If the property was used as the inheriting individual's primary residence for two of the preceding five years, up to $250,000 can be excluded from capital gains if single and up to $500,000 if married filing jointly.

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