If you inherited a property and aren’t sure how to calculate your capital gains — here’s how it works.
Let’s say you inherited a home in 2017 that was appraised at $310,000, and it’s now worth $620,000. Your basis starts at the fair market value when you inherited it — in this case, $310K. If you sell it for $610K and have $10K in selling costs, your capital gain would be the difference between your net selling price and your basis.
Example:
$610K sale – $10K costs – $310K basis = $290K capital gain
If the property was used as a rental, you’ll also have to subtract depreciation you’ve claimed over the years — that lowers your basis and increases your taxable gain.
So your final gain will depend on:
1. The fair market value when inherited (your basis)
2. Depreciation taken
3. Selling costs
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