Question on 1099-S Inherited property sale

[gprpepkp]

I inherited some property from my father.  The property was sold for $$69,825.22. 

Cost at closing 

$2,121.00

$1,017.50

Net to Sellers (3 Heirs ) 

$66.,733.49

My Share was $22,244.49

I received a 1099s,

I do not see where this needs to be listed in Turbo Tax.  Is this amount taxable. 

[MayaD]

Yes, the sale of inherited property should be reported and any capital gain is taxable.

Please follow the direction to report form 1099-S:

1. Login to your account.
2. Select Federal Taxes
3. Wages & Income then Income and Expenses.
4. Scroll down to Investment Income
5. Since you did not receive a 1099-B, answer “no” to the 1099-B question
6. Select Other for What type of investment did you sell?
7. Select I inherited for How did you receive this investment? 
8. To deduct your expenses ( there is no separate place to enter your expenses), Increase the basis (FMV) of the inherited property by the allowable closing costs.

 Sales expenses include:

• commissions
• appraisal fees
• broker's fees
• legal fees
• advertising fees
• home inspection reports
• title insurance
• transfer taxes or fees
• geological surveys
• loan charges (points) or other fees paid on the buyer's behalf
• any fees for a service that helped you sell your home without a broker (listing fees, promotional fliers, etc.) 

[thomaswhitmire]

Ok I got one for you:

My father inherited a house from his mom in 1982. He is one of 4 siblings. Each received 25% ownership. This past year, they all sold the house, and split proceeds 25%. So far so good. 

However, during 1982-2020, my uncle had that house listed as his primary residence.

How should my Dad treat this sale on his taxes? Capital gain/loss? Rental? Would he receive a $250,000 waiver since it was used for personal reasons?

[ToddL99]

Since this was his primary residence for 38 years, he qualifies for the capital gain exclusion on  a primary residence and should report it as the sale of his main home.

Use the Sale of Home interview found under Federal > Income and Expenses > Less Common Income. Enter "main home" in the Search box and select "jump to main home" from the results.Only report his 25% share of the selling price and adjusted cost basis (this is unnecessary if no 1099-S was issued - see Sale of Home)

See the following screenshot for assistance in navigating:

[thomaswhitmire]

ToddL,

Thanks for your quick reply and advice. I need to point out that it was my UNCLE's primary home, not my father's. As such, we wonder how my father should report it. Sale of Second Home? Can it be considered a capital investment even though it was the primary residence of one of the owners? 

Thanks!

[AmyC]

Sale of second home is a capital investment and how the sale should be reported for 3 of the siblings. It will go on the sch D as a long term investment.

The sales price should match the 1099-S you received.

The basis will be the value when inherited plus any expenses of sale (his portion).

[mmihuc]

If the property was sold to the children for $1.00 is it still considered in the estate

[KrisD15]

If real estate was sold to the children for $1.00, the basis of those properties for those children is now $1.00.

Had it been left as an inheritance, the basis would be Fair Market Value on date of passing. 

When the property is sold, anything over $1.00 will be capital gain for the new owner. 

No, the property would no longer be part of the estate. 

[Critter-3]

Selling for $1  was just for the quit claim deed ... what they really did is gift the property so the gift tax rules come into play and hopefully a gift tax return was filed at that time.  Seek local professional guidance to get this file correctly.  

[bbobin]

I have turbo tax premier and when I go into do a sale of 2nd home (sold my inherited mom's house in 2020) I do not have the option for "inherited" what am I missing? Also should I use the date she passed away or when probate was finalized for the "cost basis"?

Thanks!

[AmyC]

The date you acquired the house should be inherited but if you can't get the program to accept it, pick any date a year ore more before the sale date to force the long term holding.

The cost basis can be any value from date of passing to probate. The IRS accepts any appraisal during that time frame. It is expected that property will not vary greatly during that time.

If you sold the home fairly soon after inheriting, you will have a loss on your tax return for the sales expenses.

I am sorry for your loss.

@bbobin

[avenger5858]

I inherited this home in 2013, after my father passed, I went through the legal process of removing my 

deceased mother from the title and me being the only heir, I paid taxes all those years up until I  sold the 

home in August of 2020, I received $32,969.00  for the home, and just need to know where to put this in my 

Tax form as income.

[AmyC]

Sale of second home

1. Go to income section 
2. click on Add More Income
3. scroll down to Investment Income
4. Show more
5. Stocks, Mutual Funds, Bonds, Other
6. Start:  Continue answering the questions.
   1. Yes,
   2. 1099-B - no,
   3. one sale at a time and the boxes appear for your entries.

Inherited house has a cost basis equal to the fair market value on date of death plus any improvements (since inherited) plus expenses of sale.

The sales price should match the 1099-S you received.

@avenger5858

[Dadis3proud]

As a means to settle a dispute I made against father's estate my sisters and I are being asked to sign over our property rights with act of cash sale, mutual receipt and release and agreement to close probate paperwork all at same time. We were told no 1099s were bein issued at sale. What's going on? There would be no way for us to report this and it seems like they want the sale to be after probate is closed. Doesn't that make the proceeds regular income and leave us with hefty tax burdens?

[Critter-3]

With or without a 1099-S the sale must still be reported.  Contact the closing company or RE attorney to get more answers.