Solved: If we sell property we acquired through a quitclaim deed how do we address the proceeds on our taxes?
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If we sell property we acquired through a quitclaim deed how do we address the proceeds on our taxes?

My wife's father named her and her sister along with himself on the quitclaim deed as joint tenants with rights of of survivorship.  When he died, the daughters sold the property. Neither of the sister have lived in the home. 

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If we sell property we acquired through a quitclaim deed how do we address the proceeds on our taxes?

You will average the cost basis for when they daughters went on as co-owners and when they took full ownership. You will deduct the cost basis from the proceeds.

For example:

House bought in 1970 for $100,000

Daughters join as owners in 1990, FMV is $150,000; each owner has basis of $50,000

Father dies in 2017, FMV is $200,00; each owner has basis of $100,000

When home is sold, each of the two owners has cost basis of $75,000 

Home sold for $210,000, each owner has proceeds of $30,000 ($105,000-$75,000) subject to long term capital gains.

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Level 1

If we sell property we acquired through a quitclaim deed how do we address the proceeds on our taxes?

You will average the cost basis for when they daughters went on as co-owners and when they took full ownership. You will deduct the cost basis from the proceeds.

For example:

House bought in 1970 for $100,000

Daughters join as owners in 1990, FMV is $150,000; each owner has basis of $50,000

Father dies in 2017, FMV is $200,00; each owner has basis of $100,000

When home is sold, each of the two owners has cost basis of $75,000 

Home sold for $210,000, each owner has proceeds of $30,000 ($105,000-$75,000) subject to long term capital gains.

View solution in original post

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