How do I handle sale of a home that was gifted to me and siblings?

[kheds]

My mother signed over deed of homeplace to myself and 11 siblings back in 2016.  The house sold in 2021 (mother still living) and I received 1099-S reflecting my 1/12 of the sale of the house.  How do I handle this in TurboTax Premier?   Thank you

[fanfare]

you have to know your cost basis.

determine the cost basis as if your mom gave the home to one child.

Then divide that number by 12.

you divide the selling expanse and actual sales price by 12 also.

[Hal_Al]

The cost basis of a gift is the giver's cost basis (usually what she  originally paid for the property plus the cost of any improvements).  If your mother owned the property jointly with your father, and he subsequently died, half the cost basis steps up to the fair market value on the date of death (if the home is in a community property state 100% of the cost basis steps up).

[kheds]

Thank you @Hal_Al & @fanfare    It was a modest home so my 1/12th was $10,833 as reported on the "2 Gross proceeds" of 1099-S and the check I received was for $10,024 which reflected the net proceeds.  Since it was gifted to us in 2016, I took ratio of the assessed value (property tax statement) from 2016 compared to assessed value (property tax statement) from 2021 (the year it sold) and used it to extrapolate a basis for 2016 based upon the net proceeds above.  So my sales proceeds was $10,024 and I determined the basis to be $7,782, so the gain is $2,242.   Does that make sense?   Also,  I was hoping since it was a gift and the net proceeds & gain modest that perhaps it fell under some threshold that the gain would not be taxed?  Thanks

[ColeenD3]

You said, "  Also,  I was hoping since it was a gift and the net proceeds & gain modest that perhaps it fell under some threshold that the gain would not be taxed? " Not at all. Your gift itself is not taxed but the gain that was accrued is taxed at the time of sale. In addition, you can't use amounts from 2016. Your basis is her basis from when she purchased it, not when you received it.

Example: your mother purchased the house in 19xx for $50,000. The value of the house at the time of the gift is $93,000. Your basis is your percentage of the $50,000, her basis, not her FMV.

[Hal_Al]

Your math and methodology are correct.  But your assumption that your cost basis is the value in 2016 (date of the gift) is wrong.  Your cost basis is your mother's cost basis.  You capital gain is one twelfth of what your mother's capital gain would have been if she had kept title and sold it herself. 

There is no threshold for it not being taxed or tax exception for gifted property.

[16SOSnav]

My parents bought a house in 1971 for $xx,xxx, my dad died in 2006.  She deeded the house to my sister in 2008 but my sister died in 2009, and the house reverted to my mother.  In  2016 , she deeded the house to me. She passed away in 2023 and I sold it for $xxx,xx.  What is the basis of the house I use for tax purposes?

[Allyn2nd]

It may depend on what state you live in.  If you live in a community property state or if your father was the sole owner, your mother's basis would be FMV at your father's death.  If they lived in a non-community property state and held the property as Joint Tenants with Right of Survivorship, your father's half only would be stepped up. The basis to your sister was your mother's basis.  But when your sister died, all of that became irrelevant and the basis for your mother became the FMV at date of your sister's death.  When she gifted it to you, there was no change: your basis is the same as your mother's was, which is the FMV when your sister died.  Gifting appreciated property near life end is usually a bad idea, unless it is a charitable gift.

It is usually better to die with appreciated property in order to take advantage of the free step up in basis.  

[16SOSnav]

What's the difference between gifted and deeded property?  My parents built a home in 1971.  My dad died in 2006.  My mom deeded the house to my sister in 2009 but my sister died in 2009.  Mon then deeded the house to me in 2016.  So the basis for the sale of the house is based when my sister died in 2009? That is when my mom got the house back.

[Anonymous_]

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@16SOSnav wrote:

What's the difference between gifted and deeded property? 

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Title to real estate is transferred via a deed, whether it is gifted to the grantee (i.e., the person receiving title pays nothing or less than fair market value) or whether full value is paid in exchange. 

If the intent was that your mother would continue living in the home until she passed when she gave you the house (via deed), then you may have a valid argument that she retained a life estate. If that is the case, then your basis would be stepped up to fair market value on the date of her death.

See https://www.law.cornell.edu/uscode/text/26/2036

You might want to consult local legal counsel and/or a tax professional in your area.