My father had transferred his house to my sisters and I but we had a life estate deed as part of this transaction. He passed away in December 2014 and we sold the house this past summer. After some research I see that we can use Fair Market value as the cost basis. Can we still add capital improvements to this cost basis to use as our adjusted basis?
Thanks for your help...
The starting point for your basis calculation is the property's FMV on your father's date of death. Then add the cost of capital improvements you and your sister made after inheriting the house. Please see IRS Pub 523 for a list of improvements that you can add to your basis. https://www.irs.gov/pub/irs-pdf/p523.pdf
The starting point for your basis calculation is the property's FMV on your father's date of death. Then add the cost of capital improvements you and your sister made after inheriting the house. Please see IRS Pub 523 for a list of improvements that you can add to your basis. https://www.irs.gov/pub/irs-pdf/p523.pdf