I have been told, that in California, a community property state, that upon the death of a spouse a new basis from which to calculate capital gains is given on both residential property and also on income rentals. I was also told that I should get appraisals on both of those properties which I did… Is it correct that the basis also gets changed for the rentals?
Now I am planning to sell my rental property. I have received one offer and am going to make a counter offer tomorrow. It was suggested on another board that I ask you about taxes that may be incurred if I take back a loan of about 31.5% of the total property value and receive interest on that loan of about 6 to 7%. The buyer will pay down the rest of the value during escrow, 68.5%. What taxes would be generated, just income taxes?
I have been told, that in California, a community property state, that upon the death of a spouse a new basis from which to calculate capital gains is given on both residential property and also on income rentals.
How the property is titled matters. If held as community property, a new basis (most commonly stepped up but also could be stepped down) is received. Tenants in Common stepped up basis is only on their portion of the property. Depreciation is also restarted for the property or portion of property that received a new basis.
Thanks for a complete answer vkg… No wonder so many people have a little of this knowledge and think they have the answer for each category of ownership… and I have heard everything you have said from a variety of people…
I have talked to a lawyer who researched this and the community property situation is good for me. I also talked with my tax preparer and got the same answer. Those favorable answers, I owe to my son, the loan broker who knew how we should be holding the property and made sure that we did…