Sale of Parents Home with name on deed

[AC1919]

I have a 1099s from the sale of my mothers home because my name was on the deed. My mother received the all the proceeds from this sale as she is still alive and chose to live somewhere else. Our names were added to the deed at some point many years ago. Do I have to report this sale even though I didn't receive anything from it? If so, how? This is not my primary home and I can't find where to add this 1099s on turbo tax that fits my situation.

I called for assistance and was told that I didn't have to report it at all but that doesn't seem right.

If I report the this form as a sale of my main home  even though it's not, then it's telling me that I owe tons of taxes on this property so that's not right either.

I see online talk of an exemption form  8949 but that is no where on Turbo Tax that I can find. When I click many of the links to see where to file this information there are always follow up questions that don't apply to me and it takes me back out to the main screen.

Please help. I just need basic simple step by step instructions on if I have to report this weird situation or not, and where. Again, my name and siblings names were only on the deed and none of us benefited from this sale. 

[JamesG1 · Accepted solution]

You should report the IRS form 1099-S but report the amount of the cost basis on IRS form 8949 as the same as the proceeds of the IRS form 1099-S.

You will report a net $0 income on your Federal 1040 income tax return.

IRS form 1099-S Proceeds from Real Estate Transactions may report:

• Your main home, 
• A second home, 
• A vacation home, 
• Land,
• Residential rental property, or
• Real property recorded as a business asset.

The tax treatment of each of these transactions differ. Sale of a second home, an inherited home or land are considered investment sales.

In TurboTax Online Premier, follow these steps to report the sale:

• Click on the Search magnifying glass and enter sale of second home.
• Click on the Jump to sale of second home link.
• Click on Add investments.
• At the screen Let's import your tax info, click on Enter a different way.
• At the screen OK, let's start with one investment type, select Other and click Continue.
• At the screen Tell us more about this sale, enter the name.  Click Continue.
• At the screen Now, enter one sale….., enter the information.  
• At the box Fair market value when previous owner passed away, enter the same dollar amount of the Proceeds.
• Click Continue.
• At the screen Let us know if any of these situations apply to this sale, answer None of these apply.  Click Continue.

The entry will be reported:

• on Schedule D of the Federal 1040 tax return, and 
• on line 7 of the Federal 1040 tax return.

Retain copies of all the paperwork associated with the second home in your tax papers.  It is possible that a tax authority will contact you at a later time and ask about the IRS form 1099-S income.

@AC1919

[Edited 02/23/25 | 3:10 pm PST]

[AC1919]

Thank you for making that clear. I really do appreciate the way you laid everything out. 

I followed the steps but they were slightly different on the Deluxe version which is what I am using. Do you mind writing out the steps using the Deluxe version. I want to be sure that I am doing this the right way. 

You also mentioned that by following these steps that it would be filling out a schedule D on the 1040 tax paperwork, does that mean that a form 8949 was not needed for my situation?

I tried to read up on that because I kept seeing that the questions turbo tax would ask me would eventually lead to that form being filled out as well as a schedule D but they never did.  And I can't figure out how to fill those out on my own when I looked into them through the IRS website.  So if you are able to explain the step by step to me on the Deluxe version, I would be extremely grateful. 

Thank you again!

[DianeW777]

It depends.  If  you are using TurboTax Online then you will be required to upgrade to TurboTax Online Premier for a capital transaction reported on Schedule D. Form 8949 will not be part of your return for a sale of a home.

1. Open your TurboTax Online or TurboTax Desktop return
2. Search (upper right) > Type schedule d (1099b for TurboTax Online) > click the jump to... link
3. Choose to enter it yourself and select Other as the type of sale

[jrd3]

This information about the sale of parents home with our name on it is very helpful. One question. In addition to my parents, the names of my two sisters and myself were on the deed. So the proceeds from the home were split 3 ways. The 1099-S I got shows the proceeds to me. My sisters got similar. So when completing the sale information, do I just report 1/3 of everything. For example the sale price, the cost of improvements etc?

[KrisD15]

The 1099-S is already split according to your post, so that would not be reduced, but the selling costs and improvements would be. 

Please be aware of how your names were on the deed, if as a Life-Estate, your basis (what the gain or loss is calculated on) would be different than if you purchased the home with your other family members. 

You can ask the closing agent how you were on the Deed, they should know. 

[jrd3]

Thanks for the reply KrisD15. You are correct, the proceeds as provided on my 1099-S reflect the split, ie one third of the total proceeds.

It WAS a Life Estate set up on the deed. My understanding from my parents attorney is that the calculation for any gain/loss would be based upon the date of death of the (last) parent until the date of the sale of the property. It is my understanding that the basis would be established by determining the fair market value of the home at the time of death and comparing that to the subsequent sale price. Any gain/loss would be determined accordingly.

Is this correct??

[MarilynG1]

Yes, your Cost Basis would be the FMV at the date of death; and, since you indicated that a Life Estate was set up on the deed, the basis of the property is stepped up to its full fair market value upon the passing of the last life tenant.

However, if your parent is still also on the deed, the proceeds you received may be considered a 'gift' to you and the parent reports the sale on their return.  This can get complicated; it's good that you have an attorney on board to advise you. 

Here's more info on Sale of Inherited Home and more discussion on Sale of Home with Life Estate.

@jrd3