Claim 50% house sale as a gift

[joe-deleon]

My mother in-law put my wife on the deed to her house as a gift in year 2000. The house was sold in 2017 with 50% going to my wife and 50% to pay for Nursing home.  Want to make sure that claiming the home sale proceeds as a gift on my 2017 tax return will is the correct way to do it. Also I am applying 50% of the total sale on my return -  is that the correct  ? Mother in-law has passed away, and there is some residual cash from her 50% that will go to my wife - how should I code that ?

[MichaelL1 · Accepted solution]

If the remaining money your wife got when the mother in law passed away,  that would be an inheritance and not subject to income tax.

For the sale of the house, it appears you wife had a joint interest, and then you would report her share of the sale (1/2) like you are doing.  

The cost or basis of the home for a gift is the:

cost to the donor (mother in law) or the fair market value at the time of the gift, whichever one is lower.  

Based on the above, you have a good handle on this.