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Need help with cost basis on co-owned property sale

I took title on my mom's house 15 years ago to help with expenses.The home was recently sold for a profit, and we split the proceeds 50/50. When I complete the cost basis for the sale, how do I account for only having 50% ownership in the property? Do I use the original cost plus improvements, or reduce it to half of the original cost and add improvements?

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Need help with cost basis on co-owned property sale

If your mom was not an equal owner of the property, then you must report the entire sale.  It it was not your main home this would be an investment sale.

If both names were on the deed then you can split the sale between you which would mean to split the original cost as you noted and then each of you add the cost of capital improvements based on your contribution to those improvements.

If the home was the main home for either of you then that person could check to see if they qualify for the home sale exclusion.  

  • The basics - live in the home 24 months out of the last five years; gain is less than $250,000

TurboTax will walk you through the process depending on which type of sale applies to you.

  • Use the search box, upper right, to go directly to the entry location:  investment sales // home sale

View solution in original post

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Highlighted
Level 2

Need help with cost basis on co-owned property sale

If your mom was not an equal owner of the property, then you must report the entire sale.  It it was not your main home this would be an investment sale.

If both names were on the deed then you can split the sale between you which would mean to split the original cost as you noted and then each of you add the cost of capital improvements based on your contribution to those improvements.

If the home was the main home for either of you then that person could check to see if they qualify for the home sale exclusion.  

  • The basics - live in the home 24 months out of the last five years; gain is less than $250,000

TurboTax will walk you through the process depending on which type of sale applies to you.

  • Use the search box, upper right, to go directly to the entry location:  investment sales // home sale

View solution in original post

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