report sale of house

[amp13771999]

I just had a tax question regarding the primary house my
mother and my father had. They sold the house that they were living
in there for the past 5 years and they did not have much capital gain from it
that much. My parent owned 1/3 of the house and my sister owned 2/3 of the house. Actually, they don’t have a 1099S form because the transfer is between mother and daughter. It was not done by the escrow office, it was done internally. At this moment they have the money in their bank account. I just wanted to know if they should report to IRS that they sold their share of the
house or not even though they did not have a capital gain in it and it was their primary house. 

[Vanessa A · Accepted solution]

No, if they sold the house and did not receive a 1099-S and all of the gain is excluded from their taxable income, then they do not have to report the sale. 

[amp13771999]

Hi,

Thanks for your response. One question to follow up with your answer I have is that If my parents don't report this thing, In the future IRS won't ask about the Money that came to the Bank account. Also Money transaction happened in March,30th,2022 

[JulieS · Accepted solution]

No, as VanessaA says, they are not required to report the sale of the house unless they receive a 1099-S, or have a capital gain of more than $500,000. 

Not reporting a home sale that is not required to be reported doesn't create any kind of audit risk. In the unlikely event of an IRS contact about this money, it can be simply explained as the proceeds from the sale of their home.