Do i need to claim $36,000 from the sale of deceased parents home?

[Opus 17]

Possibly.  It depends on when they died, how the ownership was structured before then, and how it passed to you.  Can you provide more details?

[cerommy]

Father died in 2007, Mother died on May 1 2017.  The house was sold and a reverse mortgage was paid off and the remaining amount was split between my sister and i.

[cerommy]

Also, I live in Michigan and the home was in Florida.

[MichaelL1]

You would then report your half and your sister her half in income, selling expenses, and cost basis (Fair Market Value at the date of death).  This is true is the home was inherited whey your mother passed away.  The mortgage does not get taken into account on the computing the sale of the home in determining the gain or loss.   The sale would be shown in resident return of MI also.

[Opus 17]

If you and your sister inherited the home, and there wasn't any funny business about you being put on the deed when your parents were alive, then:

You probably don't owe any tax.

You would owe capital gains tax on the difference between your cost basis and the selling price (regardless of any mortgage).  You get a "stepped up" cost basis equal to the fair market value on the day your mother died.  Assuming you sold fairly quickly and there were no major changes in the real estate market, then the selling price is the fair market value.  Since the FMV is the same as the selling price, there is no gain.

You would not even need to report it unless you recieved a 1099-S form at the closing.

If you do report it, then report it under "sales of stocks and other investments" -- not as "sale of your home."  You will be asked for the date you got it (5/1/17), the method (inherited), the cost basis (use the present market value) and the selling date and sales price.  You and your sister would each report half of each amount.

[cerommy]

Okay, thank you for your time.

[MichaelL1 · Accepted solution]

You would report the sale in the Investments section of TurboTax.

The sales price is what you got for it.  Deduct the sales expenses, and then the cost is the Fair Market Value at date of death. 

To enter your Investments sold

Click on Federal Taxes

Click on Wages and Income

Click on I'll choose what I work on

Scroll down to Investments

On Stocks, Bonds, Other, click the start or update button, you would report the sale of the home in the Investments section of TurboTax.