sale of home

Forum|Forum|4 years ago
August 16, 2021
2 replies
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My father recently died. He filed a Quit Claim deed on the property several years ago naming himself, my sister and I as owners of the property. We are looking to sell the property soon and are wondering what the process is regarding Federal taxes.

Carl11_2

Employee

He filed a Quit Claim deed on the property several years ago naming himself, my sister and I as owners of the property.

Can you clarify the above? If he filed a QC on the property, that would most likely be to "remove" himself as an owner of the property. But it very well could be that he retained his ownership and just added you and sis as owners. Yes, this does have an impact on taxes - and not a good one either.

A

Anonymous_

Employee

I am sorry for your loss. You probably need to post a few more details regarding the transfer (gift) and how you are using the property (or how the property has been used).

If your father named himself as a grantee on the quitclaim deed and also you and your sister, it appears as if you each owned a one-third interest in the home.

When your father passed, you and your sister likely acquired your father's one-third either through inheritance or operation of law (depending on the type of ownership specified in the deed). As a result, the basis of the one-third you and your sister acquired as a result of your father's passing would be stepped up to its fair market value on the date of his death.

The one-third you and your sister acquired at the time of the quitclaim deed (the conveyance) would have a carryover basis from your father's ownership (i.e., you and your sister would take your father's basis).

Note that if you or your sister owned and used the home as your main home, you may be able to exclude part or all of any gain as a result of the sale.

See https://www.irs.gov/taxtopics/tc701

It could also be the case where you and your sister were remaindermen and your father retained an implied life estate for himself. In that event, you and your sister would receive a basis stepped up to the fair market value for 100% of your interests in the property on the date of your father's passing.

rjs

Employee

You haven't given anywhere near enough detail. The tax situation is going to be a little complicated. tagteam is making a lot of assumptions, which may or may not be correct. I don't think we can properly evaluate your situation here. I suggest that you consult both a lawyer and a tax professional to determine how the sale of the home is going to be taxed. Bring the lawyer and the tax pro copies of the deed and your father's will. The lawyer and the tax pro will tell you if you need any additional documents or information.