We sold my mom's home which she purchased in 1997 but she added me to the deed in 2021. Both got 1099-S forms for half proceeds but how do I report on my taxes?

[apbrazier@comcas]

I know that my mother does not have to pay any capital gains on the sale as this was her primary residence. However, I never lived in this house and am confused on how I calculate the cost basis to determine capital gains for my tax return Do I use the market value of the house at the time that I was added to the deed?

[Bsch4477]

When she put you on the deed she gave you a gift. The cost basis of such an asset is the giver’s cost basis when given to you. That would be what she originally paid for the home adjusted for any step up in basis if she had a deceased spouse during ownership plus any capital improvements up to that time. As you can appreciate your question doesn’t have a simple answer so you might want to consult with a professional tax preparer. 

[Mike9241]

If the fair market value on the date of the gift was less than her cost basis you'll need that info. If more your basis is 1/2 her tax basis. 

if FMV was less than her cost on the date of the gift you need to calculate as follows

 if using cost produces a gain 

but using FMV produces a loss 

then you have either a taxable gain or loss. 

if both produce a loss, that's not deductible. 

[apbrazier@comcas]

Thank you.

Just have a follow up question though.

To calculate my capital gains, I would take the proceeds from my 1099-S and deduct the cost basis at the time my mom added me to her deed in 2021? or deduct half the cost basis? and then deduct half of the appropriate seller transactions (realtor fees, recording fees, etc.) from our settlement disclosure form? 

[MarilynG1]

Yes, if your 1099-S is for half of the total sales proceeds, then deduct half the cost basis at the time she deeded to you, and half the costs on the settlement statement, to determine your net gain or loss.

As posters above mentioned, the tricky part for you may be determining what the actual cost basis was on the deed date. 

apbrazier@comcas 

[apbrazier@comcas]

Thank you for clarifying this for me.  My mom did make several permanent improvements to her home over the 25 years she lived in the home (i.e. kitchen remodel, new roof, new HVAC, new driveway, fence, etc.) but I am in the process of locating the receipts and finalizing all her improvements to determine the actual cost basis of her residence. 

But I do have a few questions/concerns regarding entering this information into Turbo Tax Premier.

I upgraded from Turbo Tax Deluxe with the understanding that Premier was the software that was required to report the sale of property that was not my primary residence.

However, Premier prompts for the same exact information as Deluxe so I am confused as to why I needed to upgrade to Premier to report this sale.

Deluxe did not prompt for any information regarding the 1099-S but Premier doesn't deal with the 1099-S either. 

Premier also still lists 1099-B on Form 8949 just like Deluxe and I do not see any reference in my tax forms for 1099-S in Premier either. 

Is this how it is supposed to be or am I missing something somewhere? 

Questions asked to report this sale:

What type of investment?   I entered "Second Home"

How did you receive this investment? I entered "As a gift" (even though I was only added to deed in 2021 as second owner so I did not receive the entire property as a gift. Is this correct?)

Date acquired by previous owner? I entered the date my mom purchased her home in 1997 but I wasn't added to the deed until 2021. I am not asked what date I became owner. Which date should be entered?)

Date Sold? I entered the date the home was sold in 2023

Proceeds? I entered the amount on my 1099-S

Previous Owners Cost Basis? I entered my mom's cost basis as of the date I was added to the deed in 2021 as suggested. 

Sales Expenses? I entered half the sales expenses from settlement.

My concern ... 

On Form 8949, it reads:

You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need.
(D)Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above)
(E)Long-term transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS
(F)Long-term transactions not reported to you on Form 1099-B

Turbo Tax checked Box F which refers to 1099-B and not 1099-S but I did receive a 1099-S where long term transaction for this sale was reported to me so I am confused why Premiere checked Box F

And why is Premier referring to 1099-B for sale of real estate?  Is this correct? 

I appreciate any clarification that can be provided as it doesn't seem clear to me using this software and I don't understand why sale of property in my tax return is referring to 1099-B for this sale. 

Thank you. 

[AmeliesUncle]

Did you receive any of the proceeds?  Did you have any 'control' of the home?

If you were merely put on the title and had no authority or control of your home (your mom treated it as fully her own and she received all of the proceeds), it sounds like an Implied Life Estate.

*IF* that is the case, your taxable amount probably isn't what the 1099-S shows.  As a "remainderman", your ownership is based on the Actuarial Tables that are partly based on your mom's age.   I recommend going to a tax professional to handle this.