Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss

Gain on Sale of Main Home

Basis

The basis in a home is determined by how the taxpayer obtained the home. For example, if a taxpayer bought or built a home, the basis is what it cost the taxpayer to buy or build that home. If a taxpayer received a home through an inheritance or as a gift, the basis is either its fair market value or the adjusted basis of the home.

If the taxpayer inherited the home, the basis is its fair market value on the date of the decedent's death, or the later alternate valuation date chosen by the representative for the estate.

Determining the adjusted basis of a home received as a gift can be complex and is not in scope of the VITA/TCE programs. Advise the taxpayer to seek a professional tax preparer.

Caution

Determining the basis of property inherited in 2010 is complex and outside the scope of the VITA/TCE programs. Refer taxpayers who sold property that was inherited in 2010 to a professional tax preparer if they do not know the basis and the correct holding period.

Home under construction.