Question

Estate selling descendent home need to file taxes?

Forum|Forum|1 year ago
February 10, 2025
1 reply
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Hello, my mother passed away in September 2023 and I sold her home in June 2024. The estate received a 1099-s for $362K. Also received 1098 for $66K interest and $150K mortgage payments for paying off her reverse mortgage, the rest of the proceeds went to the state to pay back for her care, so the estate had maybe $25K left at the end, which was distributed to me as the only heir. The home did not appreciate in value during that time. My understanding is that since the home was sold by the estate then the estate can use a step up basis so no capita lgains. In that case does the estate still needs to file taxes for 2024? I read that it should if income was more than $600, but does the distribution cancel out the income from the sale? There was no other income. TIA

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DianeW777

Yes, the estate should file a return if the sale proceeds were reported in the name and EIN of the estate. Filing requirements always factor income, meaning filing allows some expenses to reduce any taxable gain or other income. The distributions from the estate will be reported on the K1 which will pass to the beneficiaries tax returns.

The cost basis for the sale is the fair market value on the date of death of your mother. Because it was fairly close to the sale date, then it's reasonable that the cost and selling price would be equal. Selling expenses may even create a loss.

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