We have received a 1099-S and not sure what to do with it. My father-in-law inherited his mother’s apartment building about 20 years ago. He passed away in 2015 and my mother-in-law has been keeping up the mortgage payments, repairs, and expenses since he passed away. The apartment building has not been generating any rent due to the poor condition and renters not paying. My mother-in-law decided to sell last summer because the loan was coming due in full in September. She had yet settled my father-in-laws estate which she had to do before she could sell the property. As soon as the estate was settled the rental property went under contract and was sold in about four weeks. She asked my wife to go to closing and had the closing attorney cut her a check for part of the proceeds and said she will get a 1099-S. My mother-in-law got a smaller portion of the proceeds and also got a 1099-S. The property was never in my wife’s name and she was in no way in possession at any point. The property was listed as John Doe Heirs and Jane Doe. My wife's name was not on the title or the deed. The property sold for $220,000 and had a mortgage that had to be paid off. After expenses my wife received $110,000. If the property were in decent shape it would have easily sold for $375,000-$400,000. The repairs were too much for my mother-in-law so she decided it was time to sell and was sold as is with no warranty. How would we go about filing our 1099-S or would there be anything to report?
This seems like it is considered a gift but wanted to make sure. The closing attorney was kind of a crook and tried to take some of the proceeds until we called him out. He almost got away with $50,000. If we were not supposed to get a 1099-S one could argue that he did it out of retaliation as my wife was very vocal about his math.
