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<<<<Appx. 1 year ago my grandmother changed the deed on her home to include my mother. It was mistakenly filed as "joint tenants in common". Recently my grandmother died, willing her home to my mother. The home (worth well below any inheritance tax value) was recently sold. Are there capital gains implications from this sale?>>>>

"Yes, there are. The tax basis of the house is the fair market value on the date of your grandmother's death. The holding period is considered long-term for inherited assets.

Peter: Any chance that only 1/2 of the house received a stepped-up basis? I am unsure what the original poster meant by "changed the deed on her home", but if grandmother executed a deed to one-half the house to her daughter [original poster's mother], might that not be considered a completed gift, at grandmother's basis, and therefore not part of the estate? Or would the fact that it was done less than three years before death and not for reasonably equivalent value (or fair market value, or insert appropriate terminology) mean that it was ignored and entire house was considered part of her estate for FET purposes and therefore entitled to step-up in basis?

"Your mother would then calculate the gain (or possibly loss because of the transaction costs) in the usual way - selling price less tax basis less selling costs."


Curiously, JAFO

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