23 Jul Dad died. How do we figure the taxes on Mom’s home sale?
Q. Mom is selling her primary residence in New Jersey after owning it since 1961. She owned it jointly with Dad, who died in 1998. How does she determine her tax liability?
— Devoted daughter
A. If your mom is unsure of the tax liabilities of her home sale, it makes sense to consult with a tax preparer who can take her through the process.
But generally, the capital gain is calculated by taking the sales price minus the cost basis — the original purchase price and improvements — minus your qualified exclusion amount, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.
The exclusion is $250,000 if you file as single or $500,000 if you file a joint return, Gobo said.
“In your case, the cost basis is calculated using the 1961 purchase price and improvements for half of the home, and the 1998 `stepped up’ basis less your mom’s $250,000 exemption,” Gobo said.
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This story was originally published on July 23, 2021.
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