My father died and left me the house. My name is on the deed. What taxes would I have to pay upon selling the house?

It depends on when you inherited it. If it was in 2010, there was/is no federal estate tax, but there is not a step up in basis to the value of the property at the date you inherited it (there are some special rules around this), so if your dad's basis in the house was $200,000 and you sell it for $300,000, there will be income tax due on $100,000.

Well, not exactly correct.... in 2010, we have what's called "modified carry-over basis." This means that right now, the basis of property passing to a beneficiary other than a surviving spouse can be increased by $1,300,000, while property passing directly to a surviving spouse or into a qualified terminable interest property trust (or "QTIP" trust) for the benefit of the surviving spouse can be increased by an additional $3,000,000. Therefore, unless the value of the entire estate was worth more than $1,300,000, there's no issue around the step-up in basis. The amount of capital gains taxed would be equal to the difference between the sale price and the value of the house on the date of death. I strongly encourage you to contact a Maryland estate planning attorney to discuss the various issues you've presented.

I disagree with the prior attorney's response for the following reasons. Normally, when a person dies the property is afforded a step up in basis to the date of death. However, in 2010 there is no step in basis per se, but a carryover basis. However, every estate has the right to step up basis up to $1,300,000 under Section 1022 which the prior attorney failed to mention. So if the property was in your dad's name alone and it went to the three of you by will, there would be no capital gains to pay. But you situation is not that easy. The problem here is your statement that your name is on the deed. If your name was on the deed before death, then a gift was made to you by your dad on the date your name went on the deed. This was a mistake from a tax perspective. Your basis would be based on the adjusted basis of the real estate at that time, not the later date of death value. So you must ascertain what dad paid for the property, plus any capital improvements with proper documentation. For example, you went on the deed when the property's basis was $200,000, your basis would be $100,000. As to the other half that dad owned, there would be a step up in basis to $150,000. So the overall basis would be $250,000. The only caveat here is whether MA or Maryland has any special rules that may alter the above general discussion. Since I am not a Maryland attorney I have no comment as to its inheritance tax. As you can see this is quite complicated and you really need to sit down with experienced estate counsel to get this done correctly. Hope this helps. If you think this post was helpful, please check the thumbs up (helpful) tab below. Thanks. LEGAL DISCLAIMER Mr. Fromm is licensed to practice law in PA with offices in Philadelphia and Montgomery Counties and services clients throughout the state of Pennsylvania. He can be reached at 215-735-2336 or at the email address listed below. He is rated as an AV Preminent attorney from Lexis-Nexis Martindale Hubbell having the received the highest possble rating in legal ability and ethical standards. In addition, he has received a 10.0 rating from and recently was featured as a 5Star Wealth Manager in the Philadelphia Magazine, November 2009 issue on page 123. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

You should talk to an attorney in Maryland. Your statements that 1) your name is on the deed to the house, and 2) that the house was bequeathed to you, need to be sorted out. Did your father convey the property to you and your siblings, and retain a life estate in the property? There is a debate over how life estate transfers will be treated by the IRS. Many tax attorneys believed that people who inherited by way of a life estate would have to pay a capital gains tax. But one prominent estate planning attorney believes the tax laws that took effect in 2010 can be interpreted to include remainder interests. You can read about this issue, and find links to the new tax law at: http://estateplansplus.com/html/tax_2010.html#life_estate The new tax laws also have a carry over for the decedent's principal residence. Information on that is at: http://estateplansplus.com/html/real_estate_income_tax.html Since your family will need a Maryland attorney to handle the real estate closing, select an attorney there who can give you an opinion on what the IRS and Maryland taxing authorities will expect from you when the transaction is reported to them by the buyer's attorney. You can also locate competent attorneys at neala.org and nelf.org John L. Roberts - Estate Planning, Elder Law, Probate and Disability Law Longmeadow, Massachusetts