Question

1099-s for home deeded to children

Forum|Forum|3 years ago
March 15, 2023
1 reply
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My husband's parents deeded their primary residence to their 5 children in 2008. His remaining parent died last year and the house was sold. We all received a 1099-s with gross proceeds of $20,000. While completing our taxes, inputting the 1099-s numbers, we are asked about original purchase price and upgrade costs. None of us lived in the house or contributed to upgrades on his parents'home. How do we proceed?

KrisD15

First you need to find out exactly HOW the house was "deeded" to the children.

Was this done by adding the children as owners or as a "transfer at death" (Life Estate)?

If "transfer at death" (Life Estate), the house will be treated as an inheritance and, if the sale was done right after death, the basis (or original cost) would be the same as what you realized on the sale.

If the children were added to the deed as owners in 2008, the basis (or original cost) would be the value of the property when that change in ownership happened (2008).

State laws govern Real Estate, so your situation might warrant a chat with a local Real Estate Attorney or the attorney who facilitated the deed change.

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