Q. My father purchased five lots of undeveloped property for $5,000 in the 1950s. My brother and I received them as an inheritance. My brother sold his, and I own two remaining lots that I believe are worth $65,000. Property tax is about $600 a year. If I sell, do I need to go through a Florida realtor or attorney, and what would the fee be? Would there be capital gains due? How would it work if I gifted the lots to my son or put them in my will?
A. You have many choices here.
First, you don’t have to go through a real estate agent, and attorneys don’t usually handle sales themselves.
You have the option to make the sale yourself.
If you do use a real estate agent, the commission will depend on the agent and your agreement with the agent.
“Generally you have two realtors – one for the buyer and the other for the seller – plus the brokers split the commission, which in this case wouldn’t be that much, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. “If nobody sees your property because it is simply not worth it, you really do not win.”
On the tax side, you can expect to pay capital gains taxes on any gain above what the property was worth on your father’s date of death.
That changes if you gift the property to your son.
“Your cost basis would pass over to him – the value on your date of death,” Lynch said. “Anything above that would be a capital gain.”
If you hold the properties until your death, there would be another step-up of basis to the value on your date of death, which Lynch said is great.
“The downside is you have an asset that costs $600 year to maintain where, if you are planning on holding this to death, you will never personally benefit,” Lynch said. “If you are not going to use it, sell it, pay the tax, and do something else with it.”
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