Will profits from a home sell in 2019 be taxable? I have inherited the home in 2014 and home sold in 2019. Any ideas?

[VolvoGirl]

Did you live in it as your primary home for at least 2 years?  Or was it a rental?

[omairalopez86]

You don't need to pay capital gains tax unless you made more than $250k and have used it as a primary residence the past 2 years.  https://www.investopedia.com/terms/c/capital_gains_tax.asp

[VEpling2 · Accepted solution]

Yes, the sale could be taxable.  It will depend on how you have used the home since you inherited it and whether you sell it for more than it was worth in 2014.

If you have lived in the home as your main residence for at least 2 of the previous 5 years then you may be able to exclude the gain on the sale of the home.  If this is the case, when you enter the sale in TurboTax make sure you enter it as the Sale of your Main Residence.  The program will help you understand if you meet the criteria to exclude the gain on the sale.

If you rented out the home or otherwise cannot claim the home as your main residence for 2 of the previous 5 years, then the gain from the sale will be taxable.  The good news is that you can use the value of the home when you inherited it as your cost (basis) in the home.  You can also include any improvements you have made to the home in your costs.  In this case you will want to enter the sale in TurboTax under the Investment section as a Sale of a Second Home.  

In either case, if you sold the home at a loss, the loss is not tax deductible.

[maglib]

Spoiler

Your basis in the home will be the date of death or 12/31/14....  plus any costs you incurred and capital improvements.  You probably won't have much of a gain, if any.  What did you use the house for since inheriting, kept it as investment, rental, personal use?  

[Lisa995]

the last time I posted I ended up with my post in this "spoiler" thing, like maglib above.....I have no clue what its for or why it happened!

[tagteam]

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@Lisa995 wrote:

the last time I posted I ended up with my post in this "spoiler" thing, like maglib above.....I have no clue what its for or why it happened!

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That happens when you (inadvertently) hit the button in the screenshot below. I've done that before and had to go back and edit the post (kind of a pain and that feature really doesn't belong on this board).

[neff2012]

I am working on my 2019 Taxes. My Mom passed away in 2019 and her home

was in her name 1/3, my name 1/3 and my sister 1/3.

Both me and my Sister names have been on the deed with my Mom for 30 years.

We sold the house for $90,000 and the Attorney for my Mom's estate handled my Mom's $30,000

on her tax return. Do I claim my $30, 000 on my Tax return ? if so where? I am not sure because it is not an Investment ?

Thanks for any help you may be able to provide!!

Mike [removed]

[phone number removed]

[email address removed]

[DaveF1006]

Please review this Turbo Tax link for reporting a sale of a house with multiple owners.To determine your portion of the sale, you will report the $30,000 for your interest in the house. Also you need to determine the basis for the house. Since your mother essentially gifted you the house by placing you on the deed, you would report your basis on what she paid for it and divide it by 3.  For an example, if she paid $60,000 for it, your basis is $20,000. 

You will still need to report this as investment income even though you do not think of it as investment income. here are the steps for reporting.

1. nce you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list)
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section) (see Screenshot #1)
6. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. Choose type of investment you sold - select everything else
9. Some basic information:
   1. Description –  Usually the address of the property sold
   2. Sales Proceeds – Net proceeds from the sale 
   3. Date Sold – Date you sold the property
10. Tell us how you acquired the property - you received it as a gift
11. Enter the date your name was placed on the deed
12. Enter the basis of the house/3  when your mom bought it plus any capital improvements since it was owned. 
13. If you had a loss, on the question of "Did you use this property for business or investment?" If the gifted house was not used for any personal use (no family member lived in it or used it between the time of inheritance and the sale), you will answer that this was for investment.

[john9711]

How do I compute taxes on sale of a rental property

[Critter-3]

https://ttlc.intuit.com/questions/1933977-i-sold-my-rental-property-how-do-i-report-that?jump_to=ans...

[Hal_Al]

Q. How do I compute taxes on sale of a rental property?

 A. Sale price less cost basis (purchase price plus improvements) = your long term capital gain; which is taxed at long term capital gains rates of 0 to 23.8%, depending on your other income.  On top of that depreciation recapture (section 1250 capital gain*) is taxed as ordinary income by not more than 25%.

*You were allowed to deduct depreciation against rental income while you were renting it out. When you sell it, you are required to report the depreciation allowed as a reduction in your cost basis. This results in additional capital gain. But, because you got a direct deduction, in the past, this part of your capital gain is taxed differently than the rest of the capital gain.

Reference: https://www.thebalance.com/depreciation-recapture-3192979