Hey everyone, I’m in a bit of a pickle with my taxes and could use some advice. Back in 2017, my father gave me a property with a house on it. The place wasn’t in great shape and no one had lived there for a while. Then in 2018, the house burned down. Fast forward to 2024, and I sold the empty land for $18,000.
Here’s where it gets tricky. I made some good money on other property deals this year, so I’m hoping to use any potential loss from this sale to offset those gains. The thing is, I’m not sure how to figure out my cost basis.
My dad bought the land and built the house way back in the 70s. I’m guessing he spent about $50,000 on it total. Before the fire, the tax folks said it was worth around $120,000.
Can anyone help me figure out how to calculate my cost basis for my 2024 taxes? I want to make sure I’m doing this right. Thanks in advance!
hey luna, tricky stuff! since u got it as a gift, basis calc might differ. fire could impact u – claimed any casualty loss? better talk to a tax pro for the lowdown. good luck!
Determining the cost basis for inherited property can be tricky, especially with the circumstances you’ve described. Since your father gave you the property in 2017, your basis would typically be his adjusted basis at the time of the gift. However, the fire in 2018 complicates matters. You might be able to claim a casualty loss for the fire, which could affect your basis. The $120,000 assessed value before the fire could be relevant here. It’s also worth noting that the land value may have changed between the fire and the sale in 2024. Given the complexity of your situation, I strongly recommend consulting with a tax professional or CPA who specializes in real estate transactions. They can help you navigate the intricacies of gift taxes, casualty losses, and property basis calculations to ensure you’re maximizing your potential loss while staying compliant with tax laws. It’s a small investment that could save you significantly in the long run.
Have you considered how the fire affects your basis? Did you claim casualty losses after it burned down? It might be worth consulting a local tax expert familiar with unique property cases. What are your thoughts on this approach?