My father recently passed and the sale of his house is being divided between my siblings. Is there a calculator that will show how much I will pay on taxes of the sale?

[Mike9241]

There is a step-up in basis to Fair Marlet Value on date of death. If sold soon afterwards there should be little or no gain or loss.   

[Opus 17]

Probably not very much.

If the house was inherited (and not passed by gift or something else) then the cost basis is the fair market value on the date of his death.  Any capital gain would be the difference between the selling price and the cost basis, so if the home was sold fairly close in time to the date of death, then the cost basis and selling price will be about the same and there will be no taxable capital gain, even though the cash proceeds might be significant.  

If the home changed value significantly between the date of death and date of sale (a rapidly changing real estate market) then you might have a taxable capital gain, or even a deductible capital loss, if housing prices dropped.  You would want a qualified appraisal to document this.  If there is a taxable gain or deductible loss, then each sibling would report an equal share (half, thirds, quarters, etc.).  You may want some professional help if you think there is a significant gain or loss.

If the house was transferred by gift or in some way other than inheritance, you should get legal/tax advice from a professional.

If there is a taxable gain, expect to pay 15% federal capital gains tax, or 20% if your total taxable income is more than $250,000 (single) or $400,000 (married).  Most states tax capital gains the same as regular income, so between 3%-13% depending on your state and your other income.

[pk]

@ljharnick , agreeing with excellent reply from @Mike9241 , just wanted to add that this is so  if , and  only if , your father  did not put the house in an irrevocable trust.   This is sometimes done to  meet the "spend down'  path/ requirement to get medicaid. .  This is because in such a case the  trust and its contents/assets  are outside the  "Estate " of the  demised person and hence  generally cannot get a step-up.    Most people just have a revocable trust and so it is not an issue.

[Hal_Al]

Q. Is there a calculator that will show how much I will pay on taxes of the sale?

A.  Try this tool https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1. Enter your regular income first to see the regular tax.  Then add the gain to see the effect on your tax.  Your share of the sale price of the house is not taxable income. Any taxable income is the the capital gain (profit) on the sale. Enter the difference between the sale price and your cost basis as a long term capital gain (LTCG). 

But, as others have said, you most likely do not have a gain, because the stepped up value of your share of the house is your cost basis.  Given the expenses of sale (e.g. Realtor commission), you may even have a loss.  So, another question you might want to ask is:

Q. Is a loss on the sale deductible?

A. It depends on how the property was used between the time you inherited it and sold it.  You may deduct a loss on investment property, but not on personal use property. 

If the house  sat vacant during that time, then it was "investment property", and you can deduct the loss. If it was used as a home by any family member, it is personal use property and you cannot  deduct the loss on your share.

[maryriemer]

The house was in a trust for all 6 of us kids.  He died in January 2023, in May 2023 we had it appraised at $446.000 and sold in November 2023 for 499,999.  Do I need to include the 1099S in my return with Intuit turbo tax?  

[Opus 17]

In general, if you got a 1099-S, you need to show it on your return, because the IRS will assume the sale was fully taxable and send you a bill if you don't report what actually happened.

If the appraised value was $446,000, you can add the real estate commission and certain other expenses of sale.  That might bring you up to (let's guess) $476,000.  If you were the only owner, you would report $499,999 as the selling price, $476,000 as the adjusted cost basis, and pay capital gains tax on $23,999.  As a 1/6 owner, you would report the basis and selling price of your share as $79,333 and $83,333 and your taxable gain is $4000.  

I don't know if the house being in a trust makes a difference, the gain probably passes through to you anyway.  Do you know if the trust will file a 1041 tax return for trusts, or issue the beneficiaries a K-1?

@tagteam  ??

[tagteam]

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@Opus 17 wrote:

I don't know if the house being in a trust makes a difference, the gain probably passes through to you anyway.  Do you know if the trust will file a 1041 tax return for trusts, or issue the beneficiaries a K-1?

@tagteam  ??

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I don't know how in the world this transaction was handled because @maryriemer stated that a 1099-S was received (issued to whom and with what Tax ID number?). Did the trustee ever bother to apply for an EIN for the trust?

Typically, when real estate is held in the same of a trust (grantor trust) and that trust becomes irrevocable upon the passing of the grantor, an EIN is applied for, issued, and then the property sold out of the trust. Depending upon the terms of the trust, the trust could distribute the proceeds of the sale and issue K-1s (reflecting any gain or loss) or pay any tax due on the sale and distribute the proceeds tax-free to the beneficiaries.

I suppose the key question to be answered here is who was issued a 1099-S (the trust, one beneficiary, or all of the beneficiaries (in equal shares?)).

I have seen a huge number of trusts where real estate never does get titled in the name of the trust and never even gets added to the schedule of property the trust holds.