Dear Liz:My sister and I inherited a house from our mom in 2003. Back then, it was appraised at close to $500,000.

It’s now worth $1.3 million and we want to sell and split the profits. My sister has lived in the house since Mom passed. Approximately what would the tax liability be?

Answer:You’ll determine the potentially taxable profit by subtracting the tax basis — the amount the house was appraised for at your mother’s death, plus any qualifying improvements — from the sale proceeds.

Your sister can exempt $250,000 of her share of the profits, since she has owned and lived in the house for two of the previous five years. If her share of the profit was $400,000, for example, she would owe long-term capital gains taxes on $150,000 of that.

As a non-occupant, you wouldn’t have the option to exempt any of the profit, so you would owe long-term capital gains taxes on your entire $400,000 share. Long-term capital gains rates depend on your income, but the federal rate is 15% for most.

Husband’s death before retirement brings up SS question

Dear Liz:My question relates to survivor benefits.

How much does the surviving spouse receive in Social Security benefits if the higher-earning spouse dies at 59, before he ever became eligible?

He worked for 40-plus years and met all the requirements except not reaching the minimum age. I plan to wait until next year when I’m 60 years old to collect.

Will my survivor benefits be based on what he would’ve gotten if he’d reached full retirement age of 67?

Answer:The short answer is yes, but your survivor benefit will be significantly reduced if you start at age 60 and will also be subject to the earnings test, which reduces your check by $1 for every $2 you earn over a certain limit, which in 2024 is $22,320. The earnings test disappears once you reach your own full retirement age.

You’re also allowed to switch from a survivor benefit to your own, or vice versa. Most Social Security benefits don’t allow such flexibility. You could collect survivor benefits while allowing your own to grow, for example, if your own benefit would ultimately be larger.

A paid service such as Social Security Solutions or Maximize My Social Security can help you determine the best claiming strategy.

Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.