I have a 1099-S for the sale of my mom's home after she died, of which I received 50% of the proceeds (after we paid off her mortgage). How do I file this in TurboTax?

[ErnieS0]

It depends. Was there an estate? If there was no estate—and you and a co-owner each received 50% of the proceeds—report half the sale on your tax return. The other beneficiary should report the other half.

If there was an estate, the estate will file its own tax return and issue you a Schedule K-1 for your half, which you will report on your tax return.

If the 1099-S shows the entire sale proceeds in your name, send a 1099-S to the other owner for their half. List yourself as the payer and the other owner, as the recipient.

You will also file Form 1096. On this form list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here:  Click here to order forms or publications from the IRS.

[jillianksandoval]

Thank you for your response! There was no estate. The title company split the proceeds 50/50 between my brother and me. More specifically, I'm a little confused because the gross proceeds listed on the Substitute 1099-S Form I received are much more than the actual cash I received from the title company. I'm not a homeowner, so this is my first time dealing with any sort of real estate transactions on my taxes. Should I just use the gross proceeds amount when I file my taxes, or am I able to deduct any of the settlement charges? I'm using Turbo Tax Premier Edition to file this year.

[MaryK4]

No you do not have to use the gross proceeds- you should include any settlement fees as selling expenses to help reduce the gain on the sale. 

Some settlement fees and closing costs you can include in your basis are:

• Abstract fees (abstract of title fees),

• Charges for installing utility services,

• Legal fees (including fees for the title search and preparing the sales contract and deed),

• Recording fees,

• Survey fees,

• Transfer or stamp taxes, and

• Owner's title insurance.

Some settlement fees and closing costs you can’t include in your basis are:

• Fire insurance premiums,

• Rent for occupancy of the house before closing,

• Charges for utilities or other services related to occupancy of the house before closing,

• Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994),

• Charges connected with getting a mortgage loan, such as:

  1. Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs),

  2. Loan assumption fees,

  3. Cost of a credit report,

  4. Fee for an appraisal required by a lender, and

• Fees for refinancing a mortgage.

See IRS Publication 523: Selling Your Home for a list of eligible settlement fees to use.  

@jillianksandoval