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Is there a certain income amount you have to meet to report capital gains on the sail of a second home?

Forum|Forum|1 year ago
January 5, 2025
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sale not sail. A vacation cabin I sold because my husband died. I know to add up all the improvements to go against the sale and also the cost of sale. what I don't know is if there is a minimum requirement of income where you don't have to report the capital gains.

Best answer by Mike9241

Sorry for your loss. For taxpayers in non-community property states, if he was the sole owner on the date of death the property gets stepped up to fair market value at that date. the costs of prior improvements are ignored. if there was joint ownership then only his portion gets stepped up to fair market value. your portions tax basis is your share of the original cost + your share of the costs of improvements. in a community property state as long as not owned by a non-spouse the entire value gets stepped up to fair market value. if held for sale after he died it would be treated as a sale of an investment which would be reported even if there's a loss on sale as long as you did not continue to use it as a vacation home or rent it out. in these other situations if you got a 1099-S you'll need to report the sale. if continued to be used solely as a vacation home, any gain would be taxable but any loss would not be deductible. if rented various rules would apply.

M

Mike9241Answer

Sorry for your loss. For taxpayers in non-community property states, if he was the sole owner on the date of death the property gets stepped up to fair market value at that date. the costs of prior improvements are ignored. if there was joint ownership then only his portion gets stepped up to fair market value. your portions tax basis is your share of the original cost + your share of the costs of improvements. in a community property state as long as not owned by a non-spouse the entire value gets stepped up to fair market value. if held for sale after he died it would be treated as a sale of an investment which would be reported even if there's a loss on sale as long as you did not continue to use it as a vacation home or rent it out. in these other situations if you got a 1099-S you'll need to report the sale. if continued to be used solely as a vacation home, any gain would be taxable but any loss would not be deductible. if rented various rules would apply.