My dad passed away this past January. He left my mom a jointly owned beautiful piece of property in rural Wisconsin.
Here’s the details:
Purchase price was 250,000. The house was a derelict farmhouse appraised for $20,000.
Land is just a shade over 100 acres.
My mom now wants to sell. We have one semi firm offer and talked to a real estate attorney to proceed with a fsbo. She has advised us to talk to a cpa because of the capital gains.
Here’s the potential deal:
Sell for 430,000. A gross appreciation of 180,000. Which at first blush seems like a bunch since they’ve only owned the property since 2015.
But...the farmhouse was derelict. Valued at 20k. My mom and dad gutted it. Down to the studs. Beautifully remodeled. It’s a 2 story cabin with 2 bedrooms and 2 3/4 baths and unfinished basement . about 1600 square feet of finished.
In my mind, houses in that area sell for 100 per square foot. So there house might be worth about 160k. Which would be a gain of 140k. And the acreage would have appreciated another 40k. Which seems more reasonable. I believe that the gain in the primary residence can be excluded from capital gains based on the following website:
https://www.tophandadvisors.com/straight-talk-educational-guides/section-121-selling-home-along-with-farm-ranchI’m not sure any of it really matter as dad has been dead only about 4
Months. And isn’t there some provision that a widow would inherent the stepped up amount effectively resetting the cost basis. ?
We’ll probably talk to cpa next week, but hoping some MMM forums goers can help me become
More educated before We talk to one.
Unfortunatly, my parents kept zero records of the restoration process.