topic What will the IRS consider the basis from which the profit was made? I & sister inherited parent's home after death in 2019, sold it in 2022. Sister live there 3 years. in Deductions & credits

What will the IRS consider the basis from which the profit was made? I & sister inherited parent's home after death in 2019, sold it in 2022. Sister live there 3 years.

theresa55 — Tue, 10 Mar 2026 07:08:33 GMT

Purchase sister's 50% so she could move. Sold a few months later.

Re: What will the IRS consider the basis from which the profit was made? I & sister inherited parent's home after death in 2019, sold it in 2022. Sister live there 3 years.

Mike9241 — Mon, 07 Nov 2022 20:19:16 GMT

unless there is something you are not mentioning the tax basis to your sister is 50% of the Fair Market Value on the date your last parents died + any improvements she made.

since it seems your sister owned and occupied the property as her principal residence for 3 years before the sale to you, if there is any gain, she's entitled to use the home sale exclusion which means up to $250,000 of any gain would be tax-free. if she sold at a loss it would not be deductible because the sale was to a realted party.

on the other hand, while you owned the property for 3 years you did not occupy it for the minimum 2 years required. your basis is 50% of the date of death value + what you paid your sister for her 1/2. you are not entitled to use the home sale exclusion.

Re: What will the IRS consider the basis from which the profit was made? I & sister inherited parent's home after death in 2019, sold it in 2022. Sister live there 3 years.

Opus 17 — Mon, 07 Nov 2022 20:19:55 GMT

Your basis is one-half the fair market value on the date of your parent's death in 2019, plus whatever you paid your sister for her half.

Re: What will the IRS consider the basis from which the profit was made? I & sister inherited parent's home after death in 2019, sold it in 2022. Sister live there 3 years.

Opus 17 — Tue, 08 Nov 2022 00:30:05 GMT

@Mike9241 wrote:

unless there is something you are not mentioning the tax basis to your sister is 50% of the Fair Market Value on the date your last parents died + any improvements she made.

Per the taxpayer, he bought out his sister several months before selling. While the two of them may have paid less capital gains tax had they sold the property while the sister was still a co-owner, it seems that ship has sailed.

Taxpayer's basis is half the FMV on the date of the parent's death plus whatever he paid for his sister's share.