Cost Basis

Forum|Forum|2 years ago
January 24, 2024
10 replies
40 views

My father placed my brother and myself on a deed in 2013 he bought the house 1968 for 21400. We just sold it this December. Is the cost basis from date of original purchase or when we were added to the deed as joint tenants?

thanks for your help.

Opus 17

Level 15

Has your father passed? If yes, you might have received a stepped up basis, but it depends on exactly how the deed was worded. Do you know? You might need to discuss with an attorney.

DrkbestAuthor

Level 2

Yes, he passed July 2023, we sold it as joint tenants.

Opus 17

Level 15

@Drkbest wrote:

Yes, he passed July 2023, we sold it as joint tenants.

If your father retained a life estate, meaning he had the right to live there until he died, then you received the property with a stepped up cost basis equal to the fair market value on the date he died. So you likely have little to no actual capital gain.

Even if the life estate is not written into the deed, it might be implied by the overall facts and circumstances (such as, you and your father agreed he would live there until he died and that was your intention even if it wasn't written down). However, if audited, it can sometimes be more difficult to prove an implied life estate because it wasn't written down.

You might want to take the original deed to a tax accountant or attorney for a professional opinion.

If there was no life estate at all, then your basis is 1/3 the price he originally paid in 1968 (because he gave each brother 1/3 of the house if there were three names on the new deed), plus each brother inherited 1/6 the house (half the father's remaining 1/3 share) when he passed, getting a stepped up basis on that 1/6 share.

Mike9241

Level 15

you did not originally mention your stepmother was on the deed or whether she was legally married to your dad. So one other point, if they lived in a community property state, the gain for your stepmother might be different than your and your brother's gain. Even if this was a common law marriage state laws may affect stepmom's reporting. In either case, since state laws vary widely, see a lawyer.

Mike9241

DrkbestAuthor

Level 2

Hi again,

Thank you so much for your time again.

Yes my father married her in 2013. So, I understand her cost basis will be different from my brother and I.

I am working on finding the fair market value of the house in 2013. I just have to figure out the math or respond to the questions with whole numbers or just the 1/4 or 1/3 portion that is mine.

thank you again.

katherine