My Mom's home was in a living trust until her death last year. I subsequently sold the home. Where do I annotate block 2 (gross proceeds) of the 1099-S on a joint return?

[lukearkins1]

My Mother's home was in a living trust that included her, myself, and my three siblings. She passed away on 2/5/2018 after living in a nursing home for approximately 18 months. During that time, the house was unoccupied.

The home is in New York state and had been in the living trust for approximately 6 years at the time of my Mom's death. My siblings and I subsequently placed the home on the market in July 2018 after repairs were made. We closed on the property on 10/15/18.  

My chief concern is properly documenting the money received from the sale.

[KittyM]

Note: If you received a 1099-S for the sale of the home, make certain the proceeds are recorded for your share only. If not, contact the payer for a corrected form.

Your sale of an inherited home is reported as the sale of an investment, and ends up on Form 8949 / Schedule D.  To enter your sale in TurboTax,

• In your open Federal return, choose the tab for Wages & Income
• Scroll down to Stocks, Mutual Funds, Bonds, Other and Start (You may need to click Add more income to see this item.)
• On the first page Did you sell any investments in 2018? answer Yes
• On the next page  Did you get a 1099-B or a brokerage statement for these sales? answer No
• On the page Choose the type of investment you sold, select the radio button for 'second home' 
• On the page, Tell Us How You Acquired This Home, choose inheritance
• Continue to enter the property information and your proportionate share of the sale proceeds.

Here's how it works:  Each of you initially had a 1/4 share of the original cost. After your mother's passing, then each of you three remaining inherit a 1/3 share in your mother's portion, effectively make you equal 1/3 owners.  Therefore, your add to the cost basis of each share, the 'stepped-up' basis of the inherited portion. 

For example: Home Cost originally = $200,000  Each has a cost basis of $50,000. Mom then passes. The fair market value of her share is now $60,000 (stepped up value). Now the remaining owner's add 1/3 or $20,000 to their original basis of $50,000 for a total basis each of $70,000. 

Each of you three children report your new basis and proportionate (1/3) share of the sale proceeds on your tax return to compute gain or loss on the sale. 

[airbus_jas]

Kitty:  

Sad similar situation I was wondering if you clould clarify?

-Mother / Father /  Son1 / Son 2 on deed JTWROS each 1/4 share owners of home purchased Aug 2000.

-Son 2 lived in home as primary residence unfortunately passed away from Covid related heart condintion in Aug 2021. 

-Sold home in Oct 2021

- 2 years primary residence was not met for my Son 2

-Is it your understanding that all four of us claim 1/4 share of the gain on our individual schedule D tax returns? Because technically Mother / Father / and Son#1 were now 1/3 owners prior to sale due to Joint With Right of Survivorship. So is it 1/4 each claiming share on taxes (including Son 2 final return)  or 1/3 with Son 2's final return not reporting it.

Thank you so much for looking at this.

Jim (airbus_jas)

[AmyC]

Son 2 did not sell the house and it is not related to his return. This is not a sale of main home for the survivors.  When son2 passed, his share of the house went to everyone left on the title. The three survivors have the original 25% basis- value from 2000 purchase plus improvements. Now, each has 1/3 of the Fair Market Value on date of death for 25% of the house.

Example:

Bought house in 2000 for $120,000- each has a basis of $30,000.

August 2021- house worth $300,000- 25% of it is $75,000 to be divided among the survivors at $25,000 each.

Each person has a basis of original plus inherited = $55,000

@airbus_jas

[airbus_jas]

Amy:

Thanks so much for replying. That was very kind as we are still struggling with our loss. 

Can you tell me which Form or Schedule to report this home sale on? Since this is not our primary home. Or is this now a second primary home? Thanks again.

I am done with my taxes (normally plain vanilla) except for this item.

Jim

airbus_jas

[GeorgeM777]

Whether you are using TurboTax online or TurboTax CD/download, the process to report the home sale is essentially the same.  Follow these steps:

1. Go to Income & Expenses (TurboTax online) or Personal, then Personal Income (TurboTax CD/download)
2. Scroll down the page to Less Common Income.
3. Select Sale of Home (gain or loss).

To report the sale, TurboTax recommends that you have your 1099-S which you should have received from the selling agent.  

@airbus_jas