Calculate home's value upon inheritance

When it's time to sell, some shocked by massive fees, tiny profits

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Jun. 1, 2011

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When it's time to sell, some shocked by massive fees, tiny profits

Benny Kass
Inman News™

DEAR BENNY: Where can a person find the value of a home on a particular date? My last surviving parent passed away on Sept. 29, 2005, and my brother and I sold her house (as heirs) in December for $75,000. Each of us received a check for less than $31,000, due to tax escrow, commission concessions for electrical work, etc. This was not including out-of-pocket expenses such as a new roof, tuck-pointing, and the list goes on.

Our real estate person says at one time she was able to provide such information, but not anymore. We did receive comps from her and a verbal assessment that the house was valued at about $110,000 upon my mother's death. I have checked Internet sites such as Zillow and can get a range, but no specifics. If you could direct us, I would appreciate it. --Gerri

DEAR GERRI: That's an excellent question, but let me explain why you need this information before I give you an answer. The stepped-up basis is back as of this year (2011). That means that the value of the property on the date a person dies becomes the tax basis for their heirs.

So if your dad bought the house for $50,000 and sold it for $75,000, he would have a gain of $25,000. But if the property was worth $75,000 when he died, your basis for tax would be that amount, and if you sold it for that price, you would have no gain -- and thus would not have to pay any capital gains tax.

So, the question is: Where and how can you find the value of the property on the date of death -- especially since so many years have gone by?

The IRS will in most cases accept the tax assessment that the county uses to determine the real estate tax. You should be able to find the assessment from the county where the property is located, either online (some jurisdictions have this information going back several years) or directly from the county tax office.

That's the best way. You can also hire an appraiser who should be able to assist. Good appraisers know how to determine market value.

Finally, if all else fails, you can rely on the information provided by your real estate agent.

DEAR BENNY: Some years ago I read an article stating that homes in a 55-and-over development should get a reduction in home insurance. Is this true? If so, how do I convince my insurance company? --Ray

DEAR RAY: I don't know that much about insurance, but have not heard about this. I do know that insurance companies give discounts for such things as smoke detectors, good track record, or having other insurance coverage with the same company (such as auto and home). But I just don't know the answer to your question. Perhaps my readers can assist.

DEAR BENNY: I want to pay extra on my principal. I remember you saying not to pay it with your regular payment. But I don't remember what you said to do. I don't just want to send it without any other paperwork. Should I call the company? I think they will just tell me to send it with my regular payment. --Judi

DEAR JUDI: If you can afford to make extra payments on your mortgage, your loan will be reduced faster, and you will end up paying a lot less interest.

I did not say not to pay it with your regular payment. What I said was to write on the bottom of your check "xxx$ extra principal payment." Also, all mortgage lenders have some form of voucher that you have to send in with your monthly payment. There will be a line for "extra payment," so fill it in.

If you are making your payments automatically through your bank, you should advise your lender -- in writing -- that you are making extra payments.

But, regardless of how you do this, at the end of each year, confirm by reviewing your mortgage balance that your extra payments have, in fact, been credited toward your loan.

DEAR BENNY: My husband passed away recently. I need to know what to do and where to go to have his name taken off the title to our house. It is in both our names and he left a will stating everything goes to me. Can I do this myself, as money is pretty short now? --Marcia

DEAR MARCIA: First, you state that the property was titled in both your names. I need to know exactly how title was held. There are three ways: (1) tenants by the entirety -- this is reserved for husband and wife. When one spouse dies, the survivor is the owner and no probate is required; (2) joint tenants with rights of survivorship -- while this can be used by husband and wife, usually it is used by nonmarried people.

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