My husband inherited 1/3 of his father's share of a family cottage. Now him and his sister own 50/50. How do we report the inheritance when filing taxes?

[DoninGA · Accepted solution]

If the property has not been sold there is nothing to enter on the tax return.  Inheritances received are not reported on a federal tax return.

[Hal_Al]

As @DoninGA said, you have nothing to report on your current year tax return.  Inheritances are not reportable. But, you may need to adjust your cost basis for when the property is sold in the future. 

[Mike9241]

He needs to keep track of his tax basis in the property. The original 1/3 would probably be 1/3 of the FMV at the cottage on the date of death of his Father, assuming his father owned it 100%.  

Then depending on how he went from 1/3 ownership to 50/50 ownership, that too would be added to his tax basis.   

[litl_angel45]

The property was in his father’s, his sisters and his name- title transferred before his passing. 
a lawyer said we would need to pay tax on the third of the property- the inherited portion from his dad. 
at this point in time him and his sister own the property together that’s why I commented 50/50

[litl_angel45]

The property was in his father’s, his sisters and his name- title transferred before his passing. 
a lawyer said we would need to pay tax on the third of the property- the inherited portion from his dad. 
at this point in time him and his sister own the property together that’s why I commented 50/50

[DaveF1006]

You typically don't need to report inheritance money to the IRS because inheritances aren't considered taxable income by the federal government unless that inheritance is received from a foreign person or trust. If the value of the inheritance you received is more than $100,000, you will need to file a form 3520.  

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