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Mik7388
Level 1

Cost basis of an Inherited Home With a Life Estate - With a Twist

15 years ago, my parents jointly deeded their house to me and retained a life estate interest as recorded in the deed.  Seven years ago, my father died.  My mother continued to live in the house until this past April when she passed away.  My question is how do I determine my cost basis in the house for Federal income tax purposes.  Is my basis soley based on the market value when my Mother died, or does my father's death factor in at all.  My father left all of his possessions to my mother upon his passing, although there was no specific reference to the house.

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tagteam
Level 15

Cost basis of an Inherited Home With a Life Estate - With a Twist


@Mik7388 wrote:

Is my basis soley based on the market value when my Mother died, or does my father's death factor in at all.  


If the house was jointly owned (which it appears it certainly was) and the value was included in your father's gross estate and your mother's gross estate (which is almost a certainty as well), then your basis would be the fair market value on the date of death of your mother (the last life tenant to die).

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3 Replies
Critter-3
Level 15

Cost basis of an Inherited Home With a Life Estate - With a Twist

Is my basis soley based on the market value when my Mother died  ... 

 

YES ...dad's passing  doesn't factor in at all in this case. 

tagteam
Level 15

Cost basis of an Inherited Home With a Life Estate - With a Twist


@Mik7388 wrote:

Is my basis soley based on the market value when my Mother died, or does my father's death factor in at all.  


If the house was jointly owned (which it appears it certainly was) and the value was included in your father's gross estate and your mother's gross estate (which is almost a certainty as well), then your basis would be the fair market value on the date of death of your mother (the last life tenant to die).

View solution in original post

Mik7388
Level 1

Cost basis of an Inherited Home With a Life Estate - With a Twist

Thank you. 

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