I have previously consulted a CPA, but I still have my occasional doubts. My mother passed 07/2021. Fairly simple estate with a house with a mortgage. A Will was in place, and I was the only beneficiary. I got permission from the court to sale during probate. House was appraised 11/21, sold 02/22. House was appraised at 169k. House sold for 185k. Mortgage was paid off (40k) before the remaining funds were transferred to estate account for 6 months until it was closed. Is there technically no capital gains? I was told I didn’t need to file a 1041, but I still worry. Tia!
if you got a 1099-s with your SSN on it and reported it on your return you don't need to file a 1041.
@Amandaba04 capital gain was $16k less the selling costs.
Whether or not you received a 1099-S, the seller (may be the estate, may be you) is required to report the gain/
you are required to report world wide income, whether or not you receive a form that is reported to the IRS.
Never received a 1099. The house sold during the probate, so was never transferred into my name or anything.
@Amandaba04 then the estate is required to report the capital gain.
Were there selling expenses involved (the big one is normally the sales commission). did you spend money during the few months that the estate owned it to improve the property?
No significant expenses, just basic maintenance. Would it still be 16k gain even if the mortgage had to be paid off, which came off the top before the check was even cut to the estate?
@Amandaba04 The mortgage has no effect on the gain
here are some other selling expenses that the estate might pay. see the closing statement:
transfer tax
home inspection fee
home warranty fee
a common item - not a selling expense that can be reported on the 1041 is the proration of real estate taxes which can be a charge (expense) if there are unpaid taxes or a credit (income) if taxes were prepaid (paid for a period that is after the date of sale)