Sold property acquired by quitclaim deed & life estate in 2012. IRS states its a gift. Donor received it via quitclaim in 2006. No records of donors cost basis. how file?

[glidefar16]

Do I need the original cost basis when built? Went from Mother to Daughter by quitclaim and the daughter to Grand daughter by quitclaim & life estate. How to file?

[glidefar16]

How does the Life Estate effect the quitclaim? I thought you get a step up basis in a Life Estate transfer?

[DanielV01]

@glidefar16 Edited my answer as Life Estate does affect the quitclaim.  It's not based on the transfer date but the decedent's date of death.

[glidefar16]

If I have to find the original cost of the home built and improvements- nearly impossible without any records.

[glidefar16]

I have an appraisal from the date of the decedent , so how do I enter this into turbo tax? TT is asking for the donors step up basis. The last donor of the quitclaim deed was not the decedent. thank you

[glidefar16]

need help entering the step up basis from the Decendant in Turbotax. Wants to know step up basis of Donor. Not the same person. Thank you

[glidefar16]

HELP! Thanks......need help entering the step up basis from the Decendant in Turbotax. T Tax wants to know step up basis of Donor. Not the same person. Thank you

[DanielV01]

When did the decedent die?  When was the appraisal date?

[DanielV01]

You'll need to find out the value of the home at the time of death of the last decedent.  The Life Estate allows for you to use the "stepped-up" basis (Fair Market Value of the property at the time of death of the decedent) for the basis to determine gain and loss.  Since this Quitclaim and Life Estate was used several times, you'll need to find the value of the home at the date of the most recent decedent's death.

Having said this, if the last person in the home lived in the home for at least 2 of the last five years, the sale of main residence exclusion may still be applied.  This exclusion would allow up to $250,000 of the gain on the sale to be excluded from taxable income if qualified, and up to $500,000 of gain if the seller is married filing a joint return.  Please see this FAQ for more information if this exclusion applies, and how to handle the sale if it does not apply: https://ttlc.intuit.com/replies/3300213 

[Edited 3/23/2019: 21:01 PST]