My grandma passed away in 10/2017 and left her house to her 3 kids. It was sold in 12/17. Do capital gains apply for the portion my mother received?

[erinah01]

The home was fully paid off as of my grandmas death. The home was sold for under market value for a quick sale. Would my mother be responsible for paying capital gains?

[Phillip1 · Accepted solution]

On the sale of inherited property, fair market value of the home on the date of your grandmother's death is treated as your cost basis for determining the capital gain. With multiple beneficiaries, the sales proceeds and the inherited basis is split between the beneficiaries.

Since there was no gain on the sale, there would be no capital gains tax. 

However, there would be a capital loss on the sale that could be partially deducted in the current year (up to 3,000 dollars) and each following year until the entire loss is fully deducted.

[maglib]

capital loss on a personal home would not be deductible... only if the home was held as an investment.  In this case the basis in the home can be reported as of date of death or as of 12/31 of the year passed so there should be no gain/loss to report.

[erinah01]

Thank you!