Can someone explain capital gains tax when selling an inherited home?

Wow really? That's such a relief! I had no idea about this step-up in basis thing. So just to make sure I understand - the $47,000 in improvements my dad made over the years doesn't even factor into the equation now? And what if the house sells for less than the appraised value? Like if I only get offers around $450,000?

The improvements your dad made don't matter anymore because your new basis is the fair market value at his death ($475,000). Those improvements helped increase the home's value over time, which is already captured in that stepped-up basis amount. If you sell for less than the stepped-up basis, like $450,000, you'd actually have a capital loss of $25,000. While you can't deduct capital losses on personal residences against your ordinary income, you can use them to offset capital gains from other sources (like stock sales) if you have any.

How exactly does it work? Do you just upload photos of documents and it explains everything? I'm dealing with my mother's estate and have no idea where to start with all these tax forms.

Sounds interesting but kinda skeptical. Does it help with figuring out what to do with other inherited assets too? I got some stocks and a retirement account along with property and I'm totally confused.

You upload photos or scans of any tax documents, property appraisals, or inheritance paperwork. The AI reads them and breaks down exactly what everything means in simple language. It was like having a tax expert translate everything into English I could actually understand. Yes, it actually handles all kinds of inherited assets. For your situation with stocks and retirement accounts, that's especially helpful because different inherited assets have completely different tax rules. Inherited IRAs have required distributions while stocks get the step-up treatment. The tool explained all of this to me with specific recommendations.

Wait this sounds too good to be true. How does some random service get you past the IRS phone queue when millions of people can't get through? There's gotta be a catch.

Does this actually work for tax questions about inherited property specifically? I've been trying to talk to someone at the IRS about my mom's vacation cabin for weeks with no luck.

They use technology that continuously redials and navigates the IRS phone tree until they get through to someone. It's not some magic backdoor - they're just doing the painful waiting part for you using automated systems. When they reach an agent, they connect you immediately. Yes, it works for any IRS department. When you sign up, you select which department you need to reach, and they'll connect you to the right place. For inheritance questions, they'd connect you to someone who can help with those specific issues about property basis valuation and reporting requirements.

I actually moved in with him about 18 months ago to help take care of him before he passed. So I wouldn't qualify for that 2-year requirement yet. Do you know if I'd need to live there longer to get that exclusion? Or does the clock reset when I inherited it?

The clock doesn't reset upon inheritance - it's based on your actual residency. So if you've already lived there for 18 months, you'd need to stay another 6 months to hit the 2-year requirement. That could save you a lot if the house appreciates beyond your stepped-up basis. Also keep in mind that you'd need to claim it as your primary residence, not just occasionally staying there. But it sounds like you've already been using it as your main home, so that part should be covered.

We used a certified appraisal dated within 30 days of my mom's passing. Cost about $500 but worth every penny for documentation. I also kept comps from similar homes that sold in the neighborhood around the same time as backup evidence.