jtax
Level 10

Deductions & credits

I am sorry, you said they "added" which I thought meant your parents stayed on as owners.

If your parents were not owners after 2005 and it was joint ownership (or equal share tenants in common) then each sibling would own 1/3 of the home. Your basis would be your parent's adjusted basis plus some share of any improvements made (perhaps 1/3, perhaps more or less if not evenly paid for).

So your gain is not [$900k - $450k] x 1/3, but rather [$900k - of your parent's basis] x 1/3. [Each # adjusted for commissions, transfer taxes, etc.]

The FMV in 2005 is not relevant except for filing of the 2005 Gift Tax return.
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