A brother & sister own a house 50/50 in Joint Tenancy that they inherited from their mother 17 years ago? When one of them dies what are the tax consequences?

[AmyC · Accepted solution]

There is no tax consequence until the house is sold. If the house is sold when one sibling dies, here is the breakdown.

Example: Mother passed and house inherited for full value at passing.  Say $100,000.

Time goes by with owners A and B. Each have a basis of $50,000.

Owner A dies and Child inherits half the house. The basis for child is half the value of the house at passing. Say house is worth $150,000 when Owner A dies. Child basis is $75,000.

Owner B and Child decide to sell the house 5 years later for $200,000.

Owner A pays tax on their 50% which would be $100,000 sales price - $50,000 basis- tax on $50,000

Child pays tax on 50% which would be $100,000 sales price - $75,000 basis = tax on $25,000