Inheriting a house in Hawaii is a pretty sweet experience, yet bitter at the same time… You are left with great property value you can use to improve your life, but you are still mourning the loss of a loved one. So you may ask yourself at this point “what are the tax consequences when selling a house I inherited in Hawaii ?” The tax laws have been designed in a way they will not add any more burden unto you upon inheriting the home or property. This implies that the financial consequences are less daunting than what you would expect, which is good news for you. 🙂
Tax Consequences when selling an inherited house in Hawaii,
Calculation of basis
In order to comprehend how you’ll be taxed having inherited a house in the Oahu, Hawaii area, you need to know how the basis is calculated. Basis, in this case, refers to the asset cost for the purpose of the calculation of capital gains along other taxes. When a person dies, the value or basis of their property in Hawaii is increased to the market value as at the time of their death. For instance, if a person purchased a home 20 years ago for $25,000 but it was worth $100,000 at the time of their death, that property would be valued at the latter amount for the purpose of calculating capital gains.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. Such can be houses, furniture and many more things. If you decide to sell an inherited house in Hawaii, that sale is regarded as capital gain or loss for the purpose of income tax. In most cases, for you to qualify for lower rates of long-term capital gains, you are required to have held that property for at least a year. However long the duration you have been in ownership of an inherited home, any gain or loss will still be treated as long-term.
Reporting the home sale
Upon selling an inherited home, you have to report it for income tax purposes. You should first calculate your capital gain or loss. This is done by subtracting the basis from the sale amount. You should then report that amount to the necessary authorities.
Having an inherited home can be stressful given the fact that you have new property to take care of and pay taxes for it at the same time… You should go through the probate process in Hawaii as the first step to selling your house. The court will then authorize you to proceed as you wish. If there are any other individuals involved in the inheritance, you should first agree with each other on that decision. You can then file a petition requesting the court to allow you to sell the property.
You should then consider how much tax you are to pay. This will be paid against the capital gains or losses resulting from the sale of the house. You can call House Buyers Hawaii now at (808) 393-1303 to let us help with a smooth and legitimate sale of your home. We are local here in Hawaii and we know the market here better than anyone else. If you are still asking yourself what are the tax consequences when selling a house I inherited in Hawaii, then we would be happy to discuss it with you in more detail.
Selling an inherited house in Hawaii can relieve you of quite a burden. In addition to that, selling the property to an investor is a basic simple and fast process. Contact us for inquiries on how to go about things when selling your home in Hawaii and we will be glad to help you.