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Mother passed almost 2 years ago and we are selling the house

My mother passed in June 2013 and we are just now selling the house. There is no mortgage on the house and she did not have a will. The attorney we used 2 years ago said that after 1 year the house becomes legally ours to sell, we just have not done it yet. We have an accepted offer on the house and me and my 2 brothers are now trying to figure out how the proceeds we get will be taxed. I do not know the laws regarding the IRS and if we have to pay taxes on the money we collect. I have heard people say that we have to pay a MA tax, but that is it. I am just looking for facts not hearsay as that is all that I have gotten to this point.

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Submitted Tue, 04/28/2015 - 20:50

Thank you for your question and please accept my condolences on your loss.

The attorney you used some time ago was not exactly correct. You may sell property within one year, but it requires a license to sell from the probate court. You no longer need this, but you will need to make sure that the estate is properly probated and that someone has been appointed personal representative.

You receive what is called a "stepped-up basis" in your deceased mother's property, meaning that your basis in the real estate she left to you is the fair market value at the time of her death (or 6 months later). In other words, when you go to sell, you may pay taxes on the sale of the property, but only on any increase realized between her date of death and the date of sale. If you have more specific concerns, you probably should sit down with a lawyer and review the details.

Whether you owe capital gains on the sale of the property is a different issue than whether there is an estate tax due. Our office handles both probate administration and the purchase and sale of real estate, and it may be helpful for you to work with someone who understands both.

It is a great time to sell, if that's what you have chosen to do.

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