I know there's usually no tax on an inheritance in California but this is so large a sum, I'm wondering what it will be
If you inherited the land and it was valued at $5 million when you inherited it, then you have a basis "cost" of $5 million for the land. When you inherit property, you receive a "stepped up" basis to the value of the property on the day that the person who left it to you died. It doesn't matter what the deceased basis cost was, you basis is stepped up to the present day value. If you later sell the property for more than your stepped up basis cost, then you will owe Capital Gains Tax on the amount over the basis cost. For example, if the land was valued at $4 million when you inherited it and then you later sell the land for $5 million, you will owe Capital Gains Tax on the $1 million that the land appreciated not on the entire $5 million dollars.
The highest Federal Capital Gains Tax rate is 15% currently.
The top marginal California State Capital Gains Tax rate is 9.3% at this time.
The estate will have to pay the federal and state estate taxes before you get the property.
For the sale, you report the sale and the Date Of Death value (plus selling expenses) and if there is gain, you pay 15% for federal. California would be at ordinary income tax rates. If you live out of state, 3% will be withheld to ensure the taxes are paid.
you need to have an appraisal done at the time you r'cd this land as yours
then that is now your stepped up basis and when you sell it for the $5mil
the difference is your capital gain
no, the value you r'cd it is inheritance and not taxable
Depends on what it was worth when you inherited it.