It depends, it will take some calculation. The quitclaim deed indicates a gift to the the recipient.
If there was no insurance reimbursement for the house the basis will be for the siblings:
- The original cost you paid for the house, plus any purchase expenses, plus any capital improvements paid for before the first quitclaim deed, plus any improvements made by your father, plus any expense used to reconstruct the house after the second quitclaim deed, plus any reconstruction before sale after the third quitclaim deed.
- Divide it by the number of siblings who owned it in the second quitclaim deed. This will be the cost basis for each sibling.
If there was insurance reimbursement and/or a causality loss deduction it will be a bit more complicated. Cost basis will be:
- The original cost you paid for the house, plus any purchase costs, plus any capital improvements paid for before the first quitclaim deed, plus any capital improvements father made during his ownership, less any casualty or theft loss deductions (on a tax return) and insurance reimbursements, plus any restoration costs before and after the third quitclaim deed.
- Divide it by the number of siblings who owned it in the second quitclaim deed. This will be the cost basis for each sibling.
These basis figures are necessary to determine the actual cost basis you must use at the time of sale. A gift has different rules for cost basis depending on whether it is a loss or a gain on the sale. See the IRS FAQ below:
A gift tax return is required if the annual gift limit is exceeded for one individual (it can be doubled if a husband and wife each give a gift to the same person). If this applies you would need to see a tax professional about your next step.
- Gift Exclusion Amounts:
- 2015 - $14,000
- 2019 - $15,000
- 2021 - $15,000
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