Life Estate Sale inherited house

Forum|Forum|2 months ago
May 17, 2026
1 reply
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My mother passed away in 2008 granting her husband (not my father) a life estate. He passed away 5 months ago and my siblings (3 of us) listed the house and it has sold. My understanding is that the house basis would be based on value at death and since the house was listed quickly the sale price would be essentially the basis.

Where and how do we report on our taxes in Turbo Tax. We will receive a 1099-S for sale and we can divide by 3 and show no capital gains based on sale, but since the sale on the 1099-S will be for the full value, what is the best way to file in turbo tax in this situation?

Best answer by ghegewald

There was no personal use. I found the section of Turbotax where I can enter it. I think I select "2nd home" in the description since that is the closest to my situation. If we only receive one 1099-S, then do we just report sale and basis as 1/3. For example if we sell for 300K then we would list sale of house and the basis as 100K. It would seem that a 1099-S being higher than what I report would throw a flag with the IRS. I will pursue getting three (3) 1099's.

Thanks

M-MTax

Level 15

@ghegewald wrote:
My understanding is that the house basis would be based on value at death and since the house was listed quickly the sale price would be essentially the basis.

That would generally be correct.

@ghegewald wrote:
.....what is the best way to file in turbo tax in this situation?

Split the sales proceeds and basis into thirds and report one-third each. If you're all listed on the deed granting the life estate, the title company could issue three forms 1099-S.

Report the transaction in the investment section of TurboTax as the sale of investment property (just like a stock or mutual fund) provided there was no personal use of the property after death.

ghegewaldAuthorAnswer

Level 3

Thanks

M-MTax

Level 15

@ghegewald wrote:
There was no personal use. I found the section of Turbotax where I can enter it. I think I select "2nd home" in the description since that is the closest to my situation.

That's fine except if you have a small loss as a result of selling expenses (e.g., commissions), then you would want to use "Other" rather than second home.