House Calls: Selling Sister's House
Dear Edith: We are selling a house that belonged to my sister who died. She lived there for more than 40 years, and there's probably going to be a large profit. Can we get an income-tax break because it was her main residence? -- L. G.
Answer: You can't use the home seller's tax break on the profit, but you won't need it anyhow. Whoever inherited that house got a new cost basis, valued at the time of death.
Seller Holding Mortgage
Dear Edith: Last year, I sold my home. A contract was drawn up by a lawyer, with a down payment made by the buyers and monthly payments to me. Do I have to declare the payments as income, or can I wait until the home is completely paid off? -- V.
Answer: Your home was sold last year, and all you own now is a mortgage. Part of the down payment and the principal you receive each month represents profit. That amount, and all of the monthly interest you collect, will be subject to income tax, probably at different rates.
You should have been given a schedule listing each payment. And this is a good year for professional help with your tax return.
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Dear Edith: My mother and I owned the house I grew up in together. We were joint tenants with right of survivorship. She died recently.
I never had the deed brought up to date. I am unable to locate the deed. Is it possible to obtain a copy of the deed? How do I go about it? How do I become full owner? -- S. T.
Answer: If you had the right of survivorship, you became full owner automatically when your mother died. You didn't have to do anything about that.