In 2017 I took ownership of my parents home for estate planning purposes with the idea that they would live there until they passed on and then I would sell it. In 2021, my father passed and my mom didn't want to live there anymore. I therefore sold the house and gave her the money from the sale, which she then used to purchase another home. Now, as I try to do taxes for 2021, and not wanting to have to pay several thousand dollars in taxes for a home that I literally received $0 from the sale thereof, I am trying to figure out what to do. Is my cost basis for the home $0 because we literally just transferred it over to me? Is it the market value of the home at the time of the transfer? Am I entirely missing the boat and not thinking about something I should be? Thanks in advance for any and all advice.
In 2017 I took ownership of my parents' home for estate planning purposes.
if you went on the title in 2017 and they came off, your basis is the lower of their basis or Fair Market Value on the date of the transfer. They should have filed gift tax returns since you paid $0 and the property was likely worth more than $30K or so.
In 2021, my father passed. this would have no effect on your basis since he was no longer an owner. sorry for your loss.
I, therefore, sold the house. you apparently never occupied the house as your principal residence, therefore no hone sale exclusion is available to you. the sale is reported on your return - gain is taxable. sales price less your tax basis (see above) less selling costs
gave her the money from the sale. being the owner you made a gift to her of the proceeds that require you to file a gift tax return.
used to purchase another home. no tax consequences. nothing to report.
note. that state laws may be different then the federal laws.