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xmasjr
New Member

Our mother died in 2012, the sale of her home began in 2009. The final payment was received and deposited into the account on 3-1-17. How is this treated?

The sale began in 2009 and the final payment was received on 3-1-17.  The funds from the sale, $30,000 will be distributed to me and my sister in April 2017.  How is this treat and for what years

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MiriamF
New Member

Our mother died in 2012, the sale of her home began in 2009. The final payment was received and deposited into the account on 3-1-17. How is this treated?

You say the sale of your mother's home began in 2009. When was it actually sold?

If you listed your mother's home for sale in 2009 but it didn't actually sell before you inherited it, the rules are entirely different from what happens if the home was sold while she was still alive.

If the home was sold under contract and she financed the sale through an installment plan, and she was living in the house for at least two of the five years preceding sale, then gain up to $250,000 is exempt from tax. She is also not allowed to take a loss. There are special provisions if the house was sold to a related person.

The interest income from the sale is taxable, and for interest received after her death, the income counts as income in respect of a decedent, which accrues to her estate.

This type of sale is complicated and may require the assistance of a tax professional who can deal with your particular situation. If your mother's estate has been receiving more than $600 in income every year since her death, than an estate tax return may have been required.

If the sale contract was signed prior to your mother's death, then the cash distribution may be exempt from tax, as long as any applicable tax on the interest was paid by the estate.

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1 Reply
MiriamF
New Member

Our mother died in 2012, the sale of her home began in 2009. The final payment was received and deposited into the account on 3-1-17. How is this treated?

You say the sale of your mother's home began in 2009. When was it actually sold?

If you listed your mother's home for sale in 2009 but it didn't actually sell before you inherited it, the rules are entirely different from what happens if the home was sold while she was still alive.

If the home was sold under contract and she financed the sale through an installment plan, and she was living in the house for at least two of the five years preceding sale, then gain up to $250,000 is exempt from tax. She is also not allowed to take a loss. There are special provisions if the house was sold to a related person.

The interest income from the sale is taxable, and for interest received after her death, the income counts as income in respect of a decedent, which accrues to her estate.

This type of sale is complicated and may require the assistance of a tax professional who can deal with your particular situation. If your mother's estate has been receiving more than $600 in income every year since her death, than an estate tax return may have been required.

If the sale contract was signed prior to your mother's death, then the cash distribution may be exempt from tax, as long as any applicable tax on the interest was paid by the estate.

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