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1) My father built his Maryland house in 1957 & lived there until 8-2013. With the sale of his house,I'm sure some of the sale proceeds will be taxed on both Federal & Maryland state tax level. Is there any way to determine approximately how much will be taxed(percentage of dollar amount);so I can place $$ in an interest-bearing account for him. He built the house over a 2-5year period,as cash allowed...never had a mortgage. So,I don't know the original cost of their home...as I haven't found any receipts/documents revealing this information.

There may not be much gain to tax. Assuming your parents are still married and file jointly, they can exclude $500K of gain from the sale of the house. Establishing the cost basis of the house will be difficult, but not impossible. There should be a deed on file with some local government that will establish the cost of the property (probably vacant land) when it was purchased. Similarly, there are probably records in the tax assessors office that could establish when construction was done and if any major improvements were made to the structure over the years. There are professionals who can take that information and calculate an approximate cost for the construction/improvements. This isn't ironclad documentation of the cost basis, but it's likely the calculated cost won't be more than 5-10% of the sales price 50+ years later.

Federal tax will be at long term capital gains rates on the excess gain. I'm not familiar with MD personal income tax, but I would assume that, like most states, there is no special tax rate for capital gains and that the starting point is the capital gain reported on the federal return.

2) Will Mom's nursing home expenses (average $8000/month) qualify as a tax-deduction on Schedule A? In the past,Dad has never had enough expenses to itemize successfully...but if Nursing Home expenses will qualify...this may help offset the taxing of proceeds from selling his home.

Speak to the nursing home. Certainly some of the expense will be deductible, but it depends on the level of care she needs. The nursing home will be able to provide the information you need.

Ira
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