Capital gains from selling late father's house - affected by mortgage payoff?

[harrison6661]

Hello,

I am the executor of my late father's estate.  As executor, I sold his house for more than it was worth at the time of his death, which means his estate has capital gains from the sale.  However, most of the proceeds from the sale went into paying off the mortgage secured by his house.  For the purposes of filing an estate income tax return (1041) on the capital gains from the house sale, can the amount of the mortgage payoff be excluded from the capital gains reported (e.g. on the Form 8949, or elsewhere)?

[RobertB4444 · Accepted solution]

No.

Unfortunately, paying off a mortgage isn't deductible.  The capital gains are based solely on how much of a profit your father's estate made on the sale.  How the proceeds of the sale are spent (paying off a mortgage, etc.) is of less concern.