My mother in laws home was in a Life Estate in S Carolina. We live in Fla . The sale proceeds were divided btw her and her 3 children. She is still living. How to file ?

[ricci0]

What forms do I file for S. Carolina taxes and how do I file this ?

[Critter-3]

First you need to find out if this is a taxable sale or if the gains were excluded.  And who was actually on the title ? 

[ricci0]

They were all on the title because it is a life estate. All 3 had to sign paper work . Gain are not excluded . 

[Critter-3]

In the TT program you will complete a non resident SC return to report the sale of the home.  In the MY INFO section you will indicate you DID earn income in another state  then just follow the screen instructions. 

[ricci0]

Thx !! 

[AmeliesUncle]

This can be complicated and you should go to a tax professional.

The simplified version of it is this:  Part of the home belongs to the mother-in-law, part of the home belongs to the children.  You must ALL report the sale.  

Again, go to a tax professional.

[ricci0]

Thanks ! We are all reporting the sale . I have done my taxes for a long time . I don’t want to have my personal taxes done by someone else. I have found too many mistakes in the past . 

[AmeliesUncle]

So you know the proper percentages to report?  And the proper methods?

[ricci0]

Hi 

I can get the percentages from the attorney and it’s long term gain . Please let me know if this is not correct ? 

THX 

RICCI 

[Anonymous_]

@ricci0:

@AmeliesUncle is referring to actuarial tables, I believe.

The attorney who handled the sale may not know much about the income tax consequences of selling real estate with a life estate and remaindermen on title. Again, consult with a tax professional.

Actuarial tables: https://www.irs.gov/retirement-plans/actuarial-tables

[TomD8]

When a life estate property is sold before the life tenant dies, then there is no "step-up" in basis and capital gains are paid based on the original purchase price of the property with adjustments for improvements, etc. that haven't been deducted.  The resulting capital gain is divided up between the life tenant and the remaindermen based on age and life expectancy.  The IRS has actuarial tables for calculating this.

Note: your mother-in-law (but not the remaindermen) may qualify for the capital gain exclusion if she lived in the house as her primary residence for a total of two years out of the five years leading up to the date of sale. 

Totally agree that you need to consult a tax professional to get this done right.