ANSWERS: 2
  • Your cost basis is whatever the giftor's cost basis was. You and your husband receive a 500K exclusion since you have lived in it for more than 2 of the last 5 years. You will pay capital gains tax on anything over 500K in gains. Consider a tax saving strategy to minimize your tax burden.
  • Your starting point is whatever the grantor paid for it (way back when) plus capital improvements. Then you get the $250K each free ride...anything above and beyond that (you can subtract out selling expenses) is taxable.

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