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lundergan
Returning Member

Huose that was in a life estate was sold while the grantor was still alive - what is the date of inheritance?

My aunt transferred  her portion of a house to my in 2014 with a life estate for her.  The other people with an interest in the house had passed away and the house was sold in 2019.  My issue is she was (is) still alive when the house was sold. How do I  determine the date of inheritance ?

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tagteam
Level 15

Huose that was in a life estate was sold while the grantor was still alive - what is the date of inheritance?


@lundergan wrote:

.....she was (is) still alive when the house was sold. How do I  determine the date of inheritance ?


There is technically no date of inheritance ( no stepped up basis) because the property was sold prior to the passing of the life tenant. You will most likely need professional guidance with respect to this scenario.

 

The sales proceeds will (should) be divided between the life tenant and the remaindermen according to the IRS actuarial tables.

 

See https://www.irs.gov/retirement-plans/actuarial-tables

 

 

Further, remaindermen are not be eligible for the Section 121 home sale exclusion. With respect to the remaindermen's basis in the property for figuring a gain, that would be the same as the donor's adjusted basis (since this was a gift) except the value of the life estate at the time of the gift has to be taken into consideration.

 

Again, you (and the life tenant) should seek professional guidance with regard to this matter.

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2 Replies
lundergan
Returning Member

Huose that was in a life estate was sold while the grantor was still alive - what is the date of inheritance?

additional information in 2014 it was a quit claim deed and it was transferred at the cost of $1 

tagteam
Level 15

Huose that was in a life estate was sold while the grantor was still alive - what is the date of inheritance?


@lundergan wrote:

.....she was (is) still alive when the house was sold. How do I  determine the date of inheritance ?


There is technically no date of inheritance ( no stepped up basis) because the property was sold prior to the passing of the life tenant. You will most likely need professional guidance with respect to this scenario.

 

The sales proceeds will (should) be divided between the life tenant and the remaindermen according to the IRS actuarial tables.

 

See https://www.irs.gov/retirement-plans/actuarial-tables

 

 

Further, remaindermen are not be eligible for the Section 121 home sale exclusion. With respect to the remaindermen's basis in the property for figuring a gain, that would be the same as the donor's adjusted basis (since this was a gift) except the value of the life estate at the time of the gift has to be taken into consideration.

 

Again, you (and the life tenant) should seek professional guidance with regard to this matter.

View solution in original post

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