How do I prepare a return for a life estate sale, when my mom is still alive and I have about 82% remainderman value?

[tvelleca]

We sold my mom's home, which was a life estate, last year. My portion of the life estate was about 82%. How do I reflect that when filing my taxes?

[Hi Palms]

Have you owned the house and live there for the last 2 out of 5 years? If so, you can use the Section 121 exclusion of gain ($250,000/$500,000). 

I'm assuming you didn't use the home as your primary residence though. In that case you report your share of the proceeds from the sale (less selling expenses) and need to figure out your basis. If you received the remainder as a gift, then your basis would be the lesser of your mother's adjusted basis or the fair market value on the date of the gift. The difference would be your gain of course.

Also, if this involved an enhanced life estate, which is legal in only  few states, the remainder interest could be revoked and your mother assigned 100% of the gain on the sale.

[tvelleca]

Thank you.  However, my question was more about how to do it in the program, since it doesn't let you under the hood to add details to certain forms.

[AmyC]

See Where do I enter the sale of a second home, an inherited home, or land on my 2025 taxes? 

• For your date acquired, it will be the date the Life Estate deed was signed. 
• Description 82% remainder interest
• Proceeds - your share minus commissions

[Hi Palms]

In addition to the instructions set forth by @AmyC, you're also going to have to enter your basis in that section.

Again, your basis, assuming a no consideration was paid (i.e., a gift), would be the lesser of your mother's adjusted basis or the fair market value on the date the deed was executed.