Save Your Estate

Why should the government or anyone else direct what happens with your estate assets? Why should a court, a stranger, or someone other than your choice make the medical and financial decisions for you if you become sick and incapacitated? Why should anyone other than your spouse, life partner, or the one you choose make the decisions about your illness, hospital visits, your funeral and what happens to your estate?

Sunday, July 24, 2005

Tax Basis When Selling Property received as a Gift

Question: Selling gifted property.
20 years ago I received a portion of recreational land as a gift from a relative. Now I am ready to sell. The property has greatly appreciated. What are the tax implications? How do I compute cost basis?

Reply: Because you received a gift, your basis in the property for tax purposes is a "carryover" basis from the grantor. Essentially, whatever the grantor paid for the property, any improvements, and any gift taxes paid would increase your basis. Since it is land only, there would not have been depreciation. You would be subject to Capital Gains Tax rates and possibly the Alternative Minimum Tax.