Question

Inherited house basis calculation with no appraisal at time of death

Forum|Forum|7 years ago
June 1, 2019
4 replies
0 views

House was inherited by 4 siblings in 2016, sold in 2017 after $25k improvements, painting, flooring etc...

Did not get appraisal at time of death. How do we calculate basis, and since the proceeds are split among 4, do we split the basis as well?

Is the buyers concesssion (3% of sale price) subtracted from the sale of the house?

TurboTax Premier Mac

PatriciaV

Employee

The basis of an inherited home is generally the Fair Market Value (FMV) of the property at the date of the individual's death. If no appraisal was done at that time, you will need to engage the help of a real estate professional to provide the FMV for you. There is no other way to determine your basis for the property.

Your total shared basis would be the inherited basis plus the cost of repairs & improvements.

Each owner would report an allocated portion of the sale transaction on his/her individual tax return. The buyers concession would be deducted from the gross sales price, either as an adjustment to gross proceeds, or as a selling expense.

Additional Information

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

B

BMC763

My father passed in Dec 2018 and my 2 brothers and I just completed probate in the state of Florida and the home was transferred to our names in as of Aug 27, 2019 , we just sold the home Oct.11, 2019 . We are all Massachusetts residents. Is there a formal document that is required from a real estate agent for the cost basis to establish FMV, I would say FMV did not change from the time it was transferred in our names in Aug 2019 compared to when we sold it in Oct. 2019 . Question is how do I prove that and do I need to ? Also the proceeds were all processed via my SS# on the 1099-S but if there is no tax liability I don't think this would matter would it ? As I see it there are no capital gains. Finally at the time of the sale there was a mortgage that was satisfied and moneys were left over that we split equally , this is not taxable in our state as I understand it as there is no inheritance tax in MA. is this correct, I just need to make sure before we split all the proceeds that I am not on the hook for taxed related to this .

3

3tipper

How do i determine the value of land inherited 20 years ago?

GiseleD

If a qualified appraisal was not done, you can always refer to tax records from that year to get a general idea of the land's value. However, the safest way to obtain a valuation on this land as of 20 years ago is to get a retroactive appraisal. This is especially important if the value of the land was/is significant. Real estate professionals in your area may be able to recommend an appraiser who specializes in retroactive appraisals.

@3tipper

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

T

Trice81250

Methods of determining FMV for tax basis at sale?

O

Opus 17

Employee

FMV on the date of the sale is the price that a willing buyer pays a willing seller in an open and fair transaction (not a forced sale, not between related persons). Fair market value means just that, the fair market price.

The cost basis is something very different and can be complicated to calculate.

C

CoolFunDad

Hi Opus17, your replies to people have been extremely informative and I wanted to reach out to see if you could possibly help me answer what has been a very difficult question that 2 lawyers and an accountant have have not been able to provide me a definitive answer on. Here it is. At what point did my 2 brothers and I became OWNERS of the home we inherited if: We were designated as Co-Successor Trustees of our moms Revocable LIVING TRUST she created in 2018, she passed away in 2019, we became Co-Successor Trustees of all trusts provided for in her Declaration of Trust from 2018, and we filed a grant deed in 2020 removing the house from being in each of our names in the trust to now being in each of our names as tenants in common? The question of when ownership was established will determine if we qualify for a $250k capital gains exclusion on the sale of the home which requires that we have both owned and had the home as our primary residence for 2 of the previous 5 years before sale. Was ownership established when my mom put the house in the trust in 2018 since we were both co successor trustees and beneficiaries? Or when she passed in 2019? Or when the house was removed from the trust when the deed was filed in 2020 making my brother and I tenants in common? My brothers and I own the property equally share and share alike.

A

Anonymous

If the house was stuck in probate for a few years and the deed was therefore not allowed to be transferred in that time, is the basis still calculated at time of death or is it calculated at the time the children were actually able to "own" and sell the property?

M

MAK70

The basis of property inherited from a decedent is generally one of the following:

The fair market value (FMV) of the property on the date of the decedent's death or
The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return.

@4677501

M

MrChilln

Thank you. I see lots of responses stating that FMV on date-of-death is to be used to determine cost basis when one goes to sell the inherited property, but....

1) How do we determine FMV?

2) Do we need to engage a formal assessor or real estate agent to obtain an FMV? Is that good enough?

3) What's the true book-of-record the IRS will refer to when determining if there was a captain gain or not?

Thank you, Ed