Retirement tax questions

If you inherited the property in 2020 and sold the property in 2020, give that it was inherited property, I am guessing that you will have no gain (or VERY little gain).  By selling it right away, you aren't leaving any room for the property to appreciate in value any further. So if you inherit your parents' home and it's worth $250,000, selling it right away could help you avoid capital gains tax if it's still only worth $250,000 at the time of the sale.

 

However, if you inherited it some years ago and have been keeping it as a rental property, then you would report the sale in the same fashion as you've been splitting the Schedule E Rental Income and related Expenses. You should enter the entire amount of the 1099s on your return since the IRS has the related 1096 for this 1099s and that is what they will be looking to match it up to. Issuing your sister a 1099 for the half of hers that you are reporting, including splitting any increase in taxable income to you due to the fact that you are taking the entire net gain, is the cleanest way to transact this.