Last year I sold my moms house- I was on the title along with her- she lived in a nursing home prior to this three years- she passed away in November

[nataliemarienich]

What do I need to do with her half and my half??  She also was on Medicaid

[MichaelL1 · Accepted solution]

I am assuming you did not live in the house.  

Your half prior to death will be what you paid for it.  If she gave you half interest, then it is what her cost was.  So say she paid $10K and did improvements over many years totally $20K this is now $30K and then your 1/2 would be $15K for the 50% of the home owned prior to death.

Now for the remaining 50% after death, this is the Fair Market Value at death.  Does not matter what was paid for it.

So let us say it is worth $100K at death now your 50% inherited in now $50K

So in my example, you have now $65K basis in the home.

You need to keep track of all selling costs (commissions, staging, fixing up costs) and the sales price.  

Note: Inherited will automatically qualify for Long-term capital gain.  

You will report as follows:

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

[nataliemarienich]

Thanks!!  I have one more question...  with my mom's half of her house $$...  I went to an attorney to make sure everything was legit...  my mom now received a 1099R for 12995.48...  what do I do with this

[MichaelL1]

If the 1099R was received prior to death, her SSN should be on it and it is reported on her final 1040.  If your or other beneficiary name is on it and their SSN it is reported on their return.  There is no stepped-up basis on retriment accounts.  There is one 3rd scenario, if paid to the Estate then a 1041 (Estate return) would report and pay the tax on the 1041.