inherited house

[jlbkzo]

My mom passed in April. My name along with sisters was on a lady bird deed. We sold the house today as is for 60K. There was no capital gain on the sale as it was less than the SEV. I got a form 1099S. Do this sale have to be reported as income come tax time? Even if it was inherited? How will this effect my taxes?

[Anonymous_]

I am sorry for your loss.

Since you received a tax reporting form (1099-S), you need to report the transaction.

There will be no tax liability if you sold for less than the fair market value on the date of your mom's passing.

In fact, if the house was being held for investment purposes (i.e., no personal use), then you can actually recognize a loss on the sale (if the sales price less selling expenses is lower than the FMV on the date of death).

[jlbkzo]

thanks but is the received money reported as income and taxable?

[Anonymous_]

You report the sales price (less selling expenses), which is the money you receive, and then subtract your basis which is the fair market value on the date of death.

For example, if you receive $25,000 and your basis is $30,000, then you have a $5,000 loss.

[pk]

@jlbkzo , agreeing with my colleague @Anonymous_ , just wanted to point  out  that  ( and assuming  your house was in MI ) SEV is not the same as  FMV.  You need to use FMV ( Fair Market Value ) at the time of death as your basis in computing the gain/ loss.  My experience in MI is that SEV ( State Equalized Value)  is based on assessed  value and not Fair Market Value.  If you are not in MI, I may be totally in the left field..

Please accept my condolences for your great loss.

pk