My wife and I owned the home where my mother lived. We granted mom a Life Estate on the home, but we retained primary ownership. Mom has Alzheimer's and can no longer live in the home, she lives with us (my wife and I). The home was sold in July 2019.
Based on Capital Gains Rules, we would not have to report the sale of the home. The closing lawyer sent us 1099S forms, with the sale proceeds distributed as 50% to my wife and me and 50% to my mom. The only ownership my mom had was the Life Estate. How do we report the sale of the home?
BC
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Why do you think you the capital gain rules say don't need to report the sale?
At any rate, I recommend a tax professional that is familiar with Life Estates for both you and your mom. It needs to be reported on both of your tax returns, at the proper percentages.
In my note about Capital Gains not being reported, I was referring to "if this were my primary home." This is a second home we purchased for my mom. Therefore, the capital gains have to be reported.
The Life Estate was added to help with the annual property taxes AND to ensure mom had a place to live as long as she lives. She is still living, but cannot live by herself. I had to step-in when she was not taking her medications properly and her blood sugar was nearly 500. After discussion with my sister, it was decided that mom would live with my wife and me. Then, after we got mom's health back, we discussed disposition of the her home. We decided that selling the home was the best option.
That is likely TMI, but sometimes it helps if you know more.
Even before your comment arrived, I had decided to talk with a professional. I do appreciate the input.
BC
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