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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lee who wrote (1864)	2/23/2002 11:39:22 AM
From: Road Walker	Respond to of 306849

Steve, re: In my country the difference between purchase/inheritance price and selling price is a capital gain or loss. It can only be offset against other capital gains/losses, not against income. Here (US), assets are inherited at their value at the time of death, not at their cost basis (equities and real estate, anyway). So cap gains are not an issue. And on real estate, the estate can sell at a loss from the assessed value, and it becomes a tax credit (not deduction), deducted directly from your taxes. If you owe $20K in taxes from income, and you sell the inherated properety at a $20K tax loss, your tax is zero. At least that's the way it used to be, anyone chime in if that has changed. The point I was trying to make, if you are negotiating with an estate for a real estate purchase, this tax advantage should be clearly emphasized. Even if the tax benefit is larger than the persons tax bill, it will continue to roll over into each successive year (at I think ~$4K per year) until it is used up. So the lower selling price has no net difference to the seller, and the advantage to a quick sell is that the estate doesn't have maintenance costs for the empty real estate. There was some talk in Congress of pricing inherated assets at their cost basis, and lowering the cap gains tax, but it didn't pass (yet). That would be an advantage to huge estates that pay a hefty inheritance tax, a disadvantage to the folks with estates under the ~$800,000 (???) that don't currently get taxed (all IMH non-accountant opinion). John