Estate Sale of Primary Residence

ExecutorQuestion — Wed, 08 Oct 2025 16:36:00 GMT

I am the executor of my mother’s estate and her primary residence was sold in order to settle her debts. The remainder then went to the heirs. Do the capital gains from the sale need to be reported by the estate if it was for the sale of the primary residence of the deceased and less than 250K? This assumes that the estate maintains the same characterization of the property as the decedent. So would the exclusion still apply to the estate, even though it was sold after her death? The estate earned no other income during this time.

Re: Estate Sale of Primary Residence

Hi Palms — Wed, 08 Oct 2025 17:17:40 GMT

The Sec 121 home sale exclusion - $250k in this case - does not apply to sales by estates. Instead, the estate gets a basis for the residence that is stepped up to its fair market value on the date of death. If the sale occurred shortly after her deathe, there could be little or no gain or even a loss after expenses as a result of the basis step up.

Condolensces on your loss.

topic Estate Sale of Primary Residence in Deductions & credits

Estate Sale of Primary Residence

Re: Estate Sale of Primary Residence