Solved

Inherited property sale

Forum|Forum|6 years ago
February 12, 2020
2 replies
0 views

My husband and his sister inherited a house and a separate lot that were in a trust from the death of their mom. The properties were immediately put into their names and then sold within 2 months. We received a 1099-S for each of the property. Do we have to include this on our taxes since they were inherited? According to the title companies they have to report the sales and send us the 1099-S's.

TurboTax Home & Biz Windows

Best answer by pk12_2

@ggliverette if the sale was within a short time after the demise of the decedent, then people often take the easy route and use the sales price as the FMV. If there was a time gap and also because the title was changed , it complicates things a bit . You can always use the tax assessors' figures which tend to be a bit on the lower side ( thus creating taxable profit for the inheritors ) or get a realtor familiar with the neighborhood to give you an estimate.

Even if the title was not changed, you would still get a 1099-S, it is only that the 1099-S would have been issued to the Estate/ Trust and thus easier to handle and the basis is only based on one date ( or an alternate date within six months ) -- now you have to dates -- FMV at death , transfer date and finally the sales date . I may be just complicating a simple case . I would suggest using the FMV at death the same as the final sales price , if this all took place within a reasonable time ( such as one year from the date of death ) and if your local real-estate market is generally slow moving.

Good Luck

P

pk12_2

Employee

@ggliverette because the titles were transferred to the inheritors , the properties belong to them. Their basis in the properties would be Fair Market Value ( FMV) on the day of death of the decedent. So if you sold it soon after that there should be no capital gain.

But you do have to report the sale , even if no 1099-S was issued -- the title company is correct in issueing the 1099-S. The gain to report is Sales-price + sales expenses including commission, title search/insurance, transfer tax etc. etc. LESS adjusted basis ( which original basis at the time of transfer plus cost of any improvements )

Tell TurboTax that you sold assets / home/land etc. and it will guide you through filling out the forms and computing any capital gain tax.

Hope this helps

G

ggliveretteAuthor

How do you find out what the FMV was at the time of death? And, I take it it was a mistake putting the properties in their names, if they hadn't, would we not have had to claim it?

P

pk12_2Answer

Employee

@ggliverette if the sale was within a short time after the demise of the decedent, then people often take the easy route and use the sales price as the FMV. If there was a time gap and also because the title was changed , it complicates things a bit . You can always use the tax assessors' figures which tend to be a bit on the lower side ( thus creating taxable profit for the inheritors ) or get a realtor familiar with the neighborhood to give you an estimate.

Even if the title was not changed, you would still get a 1099-S, it is only that the 1099-S would have been issued to the Estate/ Trust and thus easier to handle and the basis is only based on one date ( or an alternate date within six months ) -- now you have to dates -- FMV at death , transfer date and finally the sales date . I may be just complicating a simple case . I would suggest using the FMV at death the same as the final sales price , if this all took place within a reasonable time ( such as one year from the date of death ) and if your local real-estate market is generally slow moving.

Good Luck