1. The house was in the kids names. Did this happen before of after death as that changes your basis in the house. If before they passed, they gave you a gift plus some inheritance. If after, your basis is your share on the date of death.
Example for kids on title before death:
- Mom and Dad bought the house in 2000 for $200,000.
- Along the way they added 2 kids names to the title.
- Each kid has a basis of 25% of the house or $50,000. Since 4 people are on the title now.
- Mom and Dad pass in 2022, house worth $400,000.
- Parents share was 50% or $200,000 to split between the kids.
- Kids now have $150,000 basis each in the house. Original plus inherited.
- If they passed farther apart than 6 months, you should evaluate for each death. See Publication 551 (12/2022), Basis of Assets - IRS
2. The property was in NY. Therefore, NY gets to tax the income. When you file your NY tax return, you may owe or have a refund.
3. Yes, you will report the sale of the house as capital gains and it is long term due to inheritance - which is always long term.
4. If you get a refund from NY, you can use the money however you would like.
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