Q: My father passed away six months ago. My mom is 87 and we had to put her in a nursing home as she has Alzheimer’s. I have power of attorney for her estate and we sold her home. Does she have to pay taxes on that sale?
A: It depends on what her profit was at the time of sale. Your mom can keep up to $500,000 in profits tax free because her husband died within the past two years. (In past years she might have been limited if the sale of the home occurred in a year other than when her spouse died. But this rule was changed last year.)
If the profit on the sale of her property is more than $500,000, then she will have to pay long-term capital gains taxes. Because the issue of death and taxes can get quite complicated, if the profit on the sale of the home exceeds $500,000, you should talk to your accountant, estate attorney, or tax preparer for more details.
Jan. 19, 2009.