TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Level 2

Solved

Question on 1099-S Inherited property sale

80 replies
576 views

My wife inherited a property which was sold, since this was part of the estate is it subject to being taxed? The estate was less than 500K.

TurboTax Premier Online

Anonymous_Answer

Level 15

Expert Reviewed

Thanks for a rather clear response to my question. I have just one thing that maybe you could clarify:

Inheritance is NOT taxed at the Federal level. Is this correct?

If this house WAS sold 9 months after death, and I enter the 1099S, will I probably have to pay tax the the IRS? I will follow your instructions provided earlier, and maybe TurboTax itself will answer this question. When I questioned a realtor, they thought I would only be liable for STEP-UP value on that home...

Again, thanks for a quick response!!

Mike

@emceebe wrote:
Inheritance is NOT taxed at the Federal level. Is this correct?

In your case, that would be correct in terms of simply inheriting the house.

However, since the house was sold, you need to determine your basis and subtract that from the sales price (less selling expenses).

In this instance, the basis would be the fair market value of the house as of the date of death of the decedent. If the sales price (less selling expenses) was more than that value, you have a gain that would be subject to taxation.

If the sales price (less selling expenses) was lower than the fair market value at the date of death, then you have a loss which could be deductible depending upon how the house was used (if held for investment, the loss could be recognized as a long-term capital loss).

Irene2805

Alumni - Intuit

Did the estate sell it or did your wife sell it after she inherited it?

Artyman76

Level 2

The property belonged to my grandma and I received 1/8 ownership, but my mom who held the majority refused to sell it so everyone went on the title. After 12 years the property was split, half was sold to a neighbor and my mom bought me out of my share of the other half. The sales price was no more than the price my grandma's estate was when appraised at her death.

LindaB1993

Alumni - Intuit

You report your 1/8 interest as your sales price. The Fair Market Value (FMV) multiplied by 1/8 at the date of death is your cost basis.

Here's TurboTax data entry:

Federal Taxes
Wages & Income
Scroll down to Investment Income
Select Stock Mutual Funds, Bonds. Select you have not received 1099-B and continue through the interview; the category is Everything else. The cost basis is the Fair Market Value on date the deceased passed away. You will be able to put your description and sale information; indicate that property is Inheritance, you'll be guided through inheritance sale.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

lkgmadmaxAuthor

Level 2

My wife was in charge of the estate, the property was sold and divided in 3rd's with here two brothers. Each received 1/3 of the proceeds. The property had an assigned value in the estate package, the sales amount did not exceed the value placed on the property in the estate package.

duppole1012

Level 2

How do I handle a 1099-s from the sale of an estate property we sold this year? We acquired the property in 2003. We each get 1/3rd of the proceeds.

Anonymous_

Level 15

The property was "acquired in 2003"? Did the estate sell the property?

Irene2805

Alumni - Intuit

Since the property was sold while it was in the estate, the proceeds of the sale distributed to the beneficiaries are NOT taxable income.

Jake743

Level 2

But do I have to report this somewhere?

Geraldine Painter

Level 2

I inherited some property from my father. The property was sold for $$69,825.22.

Cost at closing

$2,121.00

$1,017.50

Net to Sellers (3 Heirs )

$66.,733.49

My Share was $22,244.49

I received a 1099s,

I do not see where this needs to be listed in Turbo Tax. Is this amount taxable.

MayaD

Alumni - Intuit

Yes, the sale of inherited property should be reported and any capital gain is taxable.

Please follow the direction to report form 1099-S:

Login to your account.
Select Federal Taxes
Wages & Income then Income and Expenses.
Scroll down to Investment Income
Since you did not receive a 1099-B, answer “no” to the 1099-B question
Select Other for What type of investment did you sell?
Select I inherited for How did you receive this investment?
To deduct your expenses ( there is no separate place to enter your expenses), Increase the basis (FMV) of the inherited property by the allowable closing costs.

Sales expenses include:

commissions
appraisal fees
broker's fees
legal fees
advertising fees
home inspection reports
title insurance
transfer taxes or fees
geological surveys
loan charges (points) or other fees paid on the buyer's behalf
any fees for a service that helped you sell your home without a broker (listing fees, promotional fliers, etc.)

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

thomaswhitmire

Level 2

Ok I got one for you:

My father inherited a house from his mom in 1982. He is one of 4 siblings. Each received 25% ownership. This past year, they all sold the house, and split proceeds 25%. So far so good.

However, during 1982-2020, my uncle had that house listed as his primary residence.

How should my Dad treat this sale on his taxes? Capital gain/loss? Rental? Would he receive a $250,000 waiver since it was used for personal reasons?

mmihuc

Level 2

If the property was sold to the children for $1.00 is it still considered in the estate

KrisD15

Alumni - Intuit

If real estate was sold to the children for $1.00, the basis of those properties for those children is now $1.00.

Had it been left as an inheritance, the basis would be Fair Market Value on date of passing.

When the property is sold, anything over $1.00 will be capital gain for the new owner.

No, the property would no longer be part of the estate.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Critter-3

Level 15

Selling for $1 was just for the quit claim deed ... what they really did is gift the property so the gift tax rules come into play and hopefully a gift tax return was filed at that time. Seek local professional guidance to get this file correctly.

maurybondurant

Level 2

My wife and I inherited her mom's home in Dec 2018 when her mom passed away. My wife was an only child and so we inherited the home. We sold it in May 20, 2021, and financed the deal for up to 12 months. We received a deposit for 31,000 in May of 2021. We recently received the final payoff with interest (2022). How do I claim the $31,000 income in 2021 without being taxed by TURBOTAX for income. It was an inheritance.

mgoodpasture

Level 2

We received a 1099 for the sale of inherited property from sale of my wife's dad, how do i report this on return?

The sale was in CA and we live in Texas. Her value in estate was less than $100,000

emceebe

Level 2

I also received a 1099S, and wonder if the title company should NOT have done that...

3 siblings inherited a home and other cash from a mom who died, while in a revocable trust (Florida). We got 1/3 share each as cash, and did not think the HOME was ever put in our names, not sure, but now got a 1099 -S for each of us and don't know if it is NOW IRS taxable because of that. Entering it in Turbo seems to make it very complicated.. Do I pay Fed Tax? How do I enter, NOT as sale of my main home, and if it has a STEP UP VALUE, I understand that might be taxable.

Did the Title Company do us a disfavor by FIRST putting her home in our names, if that is what they did?.

PattiF

Alumni - Intuit

There are some steps in TurboTax to enter the sale of an inherited home. The steps will be listed and will be easy to follow.

You need to determine the fair market value at the date of death to enter as most of the cost basis. If the death of your mother was in the last year, then the cost basis will be the selling price. There are some costs from the sale that can be added to the basis which may cause a loss which is good tax-wise.

The Title Company did not do a disfavor to you and your siblings by issuing a 1099-S to each of you. It will make it easier to report your taxes.

The information that you need to enter is

Description - Address of house
Date sold - Date on 1099-S
Date acquired - Date of death
Sale proceeds - Amount on 1099-S
Cost basis - Same as sale proceeds plus any expenses paid to get the house ready for sale and some expenses that are listed on the settlement statement can be added to the basis. These include Title fees, real estate commissions documentary stamps, credit report costs, costs of an abstract, transfer taxes, home inspection, flood certificate, and attorney fees. All of the additional expenses are divided by three and that amount would be added to the proceeds for each sibling.

To enter this in your return:

Click on the Wages & Income tab
Next click on I'll choose what I work on
Scroll down the screen until you come to the section Investment Income
Chose Stocks, Mutual Funds, Bonds, Other and select Start or Update
The first screen will ask if you sold any investments during the year, answer
Did you get a 1099-B or a brokerage statement for these sales? Answer No
Tell us about this sale, Click I'll enter one sale at a time
The drop-down boxes can be filled out with the details of the house sale from the 1099-S and other house expenses listed in No. 5 above. This will be a short-term sale if it was less than a year since your mother died.

Date sold - your records
Date acquired - from your records
Sale proceeds -your records
Cost basis - FMV at the date of death plus other expenses listed in No. 5 above.

We are sorry for the loss of your mother.

@emceebe

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"