How to identify transfer of deceased spouse's rental property to estate in MFJ return

[inverness]

I don't see an option in Turbotax Premier to indicate that my late husband's rental property transferred to his estate at his death. The closest disposition I can indicate is a sale, but when I put the sale price at zero, I end up with a big capital loss, which I know is incorrect. I know rent income before his death should be reported on our MFJ return while income after his death should be reported on an estate income return.

A separate issue is that my property manager used my SSN for her 1099-MISC because I always acted as my husband's agent (he was incapacitated), so according to that form, all the income was earned by me instead of the estate.

I think the total taxes would end up slightly lower if the post-death income is deemed earned by the estate instead of me but not sure it makes much difference.

[Anonymous_ · Accepted solution]

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@inverness wrote:

A separate issue is that my property manager used my SSN for her 1099-MISC because I always acted as my husband's agent (he was incapacitated)....

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I am sorry for your loss.

The issue may be separate but it depends upon how title to the property was held (and the state of residence).

If your late husband owned the property in severalty (i.e., he was the sole owner and you had no interest either on title or under state law), then you can indicate that you received the income that was attributable to his estate as nominee. Basically, you would report the entire amount on the 1099-MISC and the "nominee out" the share that should be reported by the estate.

Frankly, you should seek local legal counsel and/or professional tax guidance for this matter.

[Anonymous_]

Further, if you were not the legal (or equitable) owner of the property after the passing of your husband, you can indicate that the property was converted to personal use as of the date of his passing. Doing so will stop depreciation being calculated by the program. 

Again, I urge you to seek local legal counsel and a local tax professional.

[inverness]

Thanks very much, this was very helpful.