Using an example: the house was worth $100,000 38 years ago when the original owner died (you will have to do some research to come up with that number). The only improvement was a new roof 20 years ago for $8000. It doesn't matter what you spent on repairs, only the cost of capital expenditures ("improvements") is added to the cost basis. The house was sold in 2023 for $200,000.Each of the original 3 heirs has a cost basis of $27,000 (one fourth of 100,000 +8000). Your share of the sale amount is $50,000 (one fourth of $200,000). You each have a capital gain of $23,000 ($50,000 - 27,0000). It is reported on form 8949 and transfers to Schedule D.
The newest heir has a stepped up cost basis of $50,000 (1/4 of stepped up value of $200,000). His capital gain is 0.
If you are the one who received the 1099-S, for the full $200,000 amount, then you report the full sale amount and show an adjustment [columns (f) & (g) of form 8949] for the amounts of gain attributable to the other heirs. The TurboTax interview handles this. The fourth heir might make this a little tricky. Reply back, for specific instructions, if this is your situation.
