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mcrisman1
Level 2

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

My parens passed and left their 4 children the family home. We sold the house. Since I live in Oregon -- a state in which there is no inheritance tax when the total estate assets are less than $1,000,000 (which is true in our case) do we still need to pay taxes on the home sale?  All 4 children received a form 1099-S.
12 Replies
PaulaM
Employee Tax Expert

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

The sale is reportable on your federal return, but it may not be taxable. Gain (if any) would be computed on the increase in value from the time you inherited the property until it's sale.

Enter under the investment section. To navigate to the section:

  • In your open return, select My Account
  • Tools
  • Topic Search
  • Type 'investment sales' in the box, then select GO

On the page, Choose the type of investment you sold, select the radio button for land and continue to enter the property information and your proportionate share of the sale proceeds. 

On the page, Tell Us How You Acquired This home, enter Inheritance and continue to enter the date of inheritance. Enter the FMV of the property on the date your inherited it (date of death usually). Gain/loss is computed and moved to appropriate form.for your proportionate share. 

Note: If you received a 1099-S for the sale of the land, make certain the proceeds are recorded for your share only. If not, contact the payer for a corrected form.

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mcrisman1
Level 2

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

I would really like an answer to my specific question. This response implies that the answer is yes, but the response isn't nuanced enough - it could have been answered by a machine that didn't pick up on the specificity of the question.  Is some able to respond specifically?
PaulaM
Employee Tax Expert

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

See edited answer above. The event is reportable. May not be taxable. Depends on the increase in value as stated above. Enter as outlined in the steps.
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PaulaM
Employee Tax Expert

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

See also: <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3037452-1099-s-received-for-sale-of-deceased-parents-home-taxable?...>
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mcrisman1
Level 2

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

... just to be sure I understand -- even though the total estate assets, including the house sale, are less than $1,000,000 (the Oregon threshold), the sale of the home still needs to be reported as detailed above.  Correct? (Thank you for your patience with me ...)
PaulaM
Employee Tax Expert

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

Anytime you receive a 1099-S form, it becomes reportable on your federal tax return. But you should also receive a stepped up basis to the FMV at the time of passage. So there may be little or no gain to pay taxes on, but the real estate sale is still reported.
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PaulaM
Employee Tax Expert

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

This is not an inheritance tax. No inheritance tax on a your federal return.
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mcrisman1
Level 2

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

Thank you, Paula M!!
PaulaM
Employee Tax Expert

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

You are very welcome! 🙂
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LindaBelmont
Level 6

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

@mcrisman1 - Hi, I think you are confusing inheritance tax and income tax.  There is NO inheritance tax due to Oregon since the estate was under the threshold. If there had been an inheritance tax it would be paid from the estate and the responsibility of the executor to pay it. Turbo tax does not complete inheritance tax forms.
One the estate was settled, you acquired as asset (the home).  When you sold the home, you have a gain or loss on the asset your sold and must report it on your income tax. (federal and state).  There may or may not be any tax due.
mcrisman1
Level 2

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

Yes Linda, I was confused ... thanks for clearing it up.
LindaBelmont
Level 6

Do I need to pay taxes on an inherited home sale even when the total estate's worth is minimal?

Glad I helped -

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