If you sell the property within six months or a year after the previous owner’s death, the IRS will usually accept the selling price as the fair market value at the date of death. That’s assuming, of course, that the sale was made fairly and on businesslike terms.

When to calculate cost basis for inherited real estate?

In order to calculate the cost basis for inherited real estate, you will use either the value of the property on the date of the original owner’s death, or a date selected by the executor no later this six months after the death.

How long is the holding period for inherited property?

No matter how long property or assets are actually held, either by the decedent or the inheriting party, inherited property is considered to have a holding period greater than one year. Thus, capital gains or losses are designated as long-term capital gains or losses.

When is it time to sell inherited real estate?

Inherited real estate may not be sold quickly, however, if market conditions may make it more sensible to hold onto the property for a while. And if the estate is going through probate, delay is inevitable because you may need to notify beneficiaries and possibly even get court approval before selling real estate.

How does the IRS take value of inherited real estate?

Estate beneficiaries are likely to complain (as they should), and the IRS may not accept the value when it comes to figuring how much taxable gain (if any) there was on the transaction. Inherited real estate may not be sold quickly, however, if market conditions may make it more sensible to hold onto the property for a while.

How can I find out the value of my inherited property?

One way to find out a property’s fair market value is to quickly put it on the market and sell it. And in some cases, that’s just what inheritors may want to do.