Question

Sale of Inherited Property - Tax Question

Forum|Forum|4 years ago
February 3, 2022
2 replies
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Hi

My mother passed 10 years ago and her widowed husband decided to sell their house in 2021. The proceeds were split 50/50 between her widowed husband (50%) and me and my two sibilings (50%). Which TurboTax program would work best for this situation? Also, the tax will be on the difference between what the home was valued at the year she passed and the sale price, yes?

A

Anonymous_

Employee

Was this a gift (i.e., did her widowed husband give you and your two siblings 50% of the proceeds)?

Typically, the husband here would have received a stepped up basis when your mother passed. Whether it was a full step up or just your mother's one-half would depend upon the status as either community property (in a community property state) or some other form of tenancy in a common law state.

C

cmv261Author

It is a community property state (Texas). We were unaware that her husband was going to sell it. The realtor contacted us that it was being sold and that she was still on the deed. We received the 50% as next of kin as told by the realtor.

A

Anonymous_

Employee

Yes, I understand but how was title being held between your mother and her husband?

AmyC

Employee

Premier. Let's start at the beginning and work through. First, did the husband inherit the house or did the husband and the siblings all inherit the house?

If husband inherited the house, then he just gave you money from the sale. He has the 1099-S and reports it on sch D.
If you all inherited the house, you each get a 1099-S with your portion of the sales price. The sale is reported on sch D.

The basis of the house is the value on date of death. You may be able to use the tax assessor's office or know some local real estate agents that can provide a better basis. Included in the basis will also be your share of the selling expenses. See Where do I enter the sale of a second home, an inherited home, or land on my 2021 taxes?

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