All Forum Posts by: Caleb Walters

Thanks @Natalie Kolodij.  Your comments have helped direct my research.  My father-in-law passed away recently, and that is what has triggered a lot of this exploration.  So the $500k exclusion still applies if my mother-in-law sells within two years of his death.  I also think that she will be able to exclude half of the gains?  I'm not sure I quite follow this rule.  It sounds like if they owned the home together, then upon his death, she is able to step up her basis by his half of the equity?  If this is the case, then the $500k will more than cover any taxable gains.

And yes, the two options we are considering is to sell it as is, or to tear it down and build a whole new dwelling.

Thanks for your insight thus far, it's super helpful.  I'd appreciate any more wisdom you or anyone has in this area.

This is helpful.  So the property has been my in-laws' primary residence for the past 35 years.  It remains in my mother-in-law's name and will do so throughout whatever route we go.

We are going to sell an old house that has been in the family for years.  It's a tear-down property.  I am running the numbers on the idea of tearing it down and rebuilding it myself, then selling the new construction.  The biggest unknown for me is the tax implications.  I understand how the equity in the house will be treated if we sell it today without any work.  If we completely tear it down and rebuild (which will require a construction loan over $500k), will this change our tax treatment?