Adjusted Basis of Home Sold Worksheet

[gregmack04]

My mom lives in CA and became a widow in 2023. She sold in 2024 the home she had owned jointly with my dad for 48 years. Since CA is a community property state, I'm told she is entitled to a step up in cost basis to the FMV of the home as of the date of Dad's death.  Please confirm, and if true, where should I be able to see this revised cost basis in TurboTax? Can I make a manual entry on line 2.7 of the Adjusted Basis of Home Cost Worksheet?

[KeshaH · Accepted solution]

Firstly, I'm sorry for your loss.

The step-up in basis is available to taxpayers in all states, but it does work a little differently in community property states such as California. Typically, when one spouse passes, only their portion of the home gets a step-up to fair market value. In community property states, the entire home gets the step-up. So, when your mom sold the home, her gain or loss is calculated using the full fair market value of the home on the date of your dad's passing as her basis.

You can make this adjustment as an "other increase" to basis on the adjusted basis worksheet.

[gregmack04]

Thank you so much, @KeshaH - this is super helpful info!  A follow-up question or two, if I may:  Since the date of home sale is 12 months after the date of my Dad's passing, am I required to get a retroactive date of death valuation, or can I use the home's sale price as the FMV of the property? Or is there another source (Zillow, Redfin, etc.) that is allowable?

[KeshaH]

You will need to find the FMV on the date of death to determine the new basis. The appreciation in value from 2023 and 2024 would taxable gain.

[gregmack04]

Sorry ... just so I'm clear:  Would a realtor's statement showing FMV of the property at the date of death be sufficient, or must I get a written report from an appraiser?

[KeshaH]

A formal appraisal would be preferred to a comparative analysis. The appraisal is usually considered the most reliable method of calculating the fair market value.