Quit Claim?!?

[zemog90]

Please Help!

I need help and am a total newbie to doing taxes, so I need this as plain as possible.

I was quit claimed my childhood home 3 weeks before my father's passing in 2019. the house was originally purchased in 1972 for $25K by my parents. My mother passed in 1979 and my father continued to live in the house until his death in 2019. In September of 2019, my father sensing something wasn't right with his heath quit claimed me the house and then the next week went into the hospital and passed away just over 3 weeks after he signed the paperwork. He left a will to sell the house and divide the house equally amongst my siblings.

The house sold in January 2021 for $466K . I received a IRS form 1099-S and am attempting to file my taxes myself this year. I am married filing jointly. I have tried to research the answer myself, as well as reaching out to several CPAs and spoken to a few estate attorneys with zero luck as I received multiple answers which I don't know who to trust so here I am posing the question to you all. Is this a gift? an inherence? or neither? 

At the time of his death my father was renting out a room where the renter continued to live until about 6 months before I sold the house. Please help as this is causing drama with my siblings as they are asking for their share of the proceeds, which i haven't given them anything until I can figure this situation out. 

I am totally confused and am way over my head so if you can help I would be so grateful. 

[Anonymous_ · Accepted solution]

Perhaps your best course of action would be to consider the transaction with your father in 2019 to be a transfer with a retained life estate (i.e., your father quitclaimed the property to you and your siblings but retained the right to live there until his passing - you and your siblings would then have a remainder interest).

If the foregoing is the case, then your basis in the property would be the fair market value as of the date of your father's passing in 2019. You would need something on the order of a date of death appraisal for the property but your gain would be considerably reduced.

I understand that you have already sought legal counsel, but you should try to locate a local attorney or tax professional who is familiar with estate planning (trusts and estates).

See https://www.avvo.com/estate-planning-lawyer.html

See also https://taxexperts.naea.org/listing/service/estates-gifts-trusts

[Mike9241]

sorry for your loss. we don't know what your father did.  we can't see the relevant documents. if he removed himself completely from the title (no retained life interest) then he made a gift to you and your siblings of the total ownership of the property.  in such a case his basis transfers to the donees pro-rata.  on the other hand, if he retained a life estate that would mean the donees would use a prorata portion of the Fair Market Value on the date of death.    check the title (deed) documents which hopefully were registered with whatever local government agency deals with them.   this varies from state to state.

why do you trust this public forum, on which anyone can post any answer more than an attorney in your father's state?   they can't answer because they likely did nothing to check the deed and any other relevant document.    

there should be no reason why an attorney in your father's state can't give you a definitive answer once they review the relevant documents.

i would say get this resolved ASAP or you may find your siblings filing a lawsuit against you with the possibility that all the legal fees will come out of your pocket not theirs. 

[Anonymous_]

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@Mike9241 wrote:

.....if he removed himself completely from the title (no retained life interest) then he made a gift to you and your siblings of the total ownership of the property.....

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That is not necessarily the case. A life estate can actually be implied from the circumstances.

See Treas. Reg. §20.2036-1(c)