How to report Reset Home Market Value in TurboTax with Community property with right of Survivorship?

[zeishinkoku2020]

How to report Reset Home Market Value in TurboTax with Community property with right of Survivorship? My spouse passed away a few years ago. I have the market value on date of my spounse died from the realtor. I am having difficulties entering all the numbers in TurboTax.  I would appreciate any help in this matter.

[Mike9241]

please explain what you are trying to do. did you sell the house or is there something else? 

[JulieS]

Yes, you when your inherit half of your home from your spouse, the basis of the inherited half increases to half of the fair market value at the death of death.

I assume you are trying to figure out the basis of your home because you sold it, and that the home wasn't used for business or rental use. If that's not right, reply with more details of your situation. 

When two people own a home and one dies, you have to consider the basis of each of the owners. The starting point is what you paid for the home, plus certain items that increase basis and others that decrease basis. 

Home improvements, but not repairs, increase the basis of your home. Follow this link for more details of adjustments to basis. 

Next, you need to figure out each owner's basis. 

For example, say your basis after you bought the home was $300,000. You spent $25,200 improving the kitchen, and $14,800 adding a bathroom. The total basis is $340,000, or $170,000 for each.

The value of the home when Spouse 2 passed was $500,000. The stepped up in basis is $250,000 for Spouse 2. 

The basis for Spouse 1 is the basis before death of $170,000, plus the basis inherited from Spouse 2 $250,000, or $420,000 total basis. 

[zeishinkoku2020]

Thank you for your guidance.

Yes, you are right about my situation.

When the home sale has a step-up in home price, in TurboTax, 

1. In the page "Adjusted Cost basis of your home":  For the date bought or acquired, should I enter the original purchase date or the date of the decedent's death?

2.In the Adjusted Cost Basis Easy Guide: For Original Value, should I enter the original purchase price or the fair market value of the home on the date of the decedent's death?

When I click on the "Cost" explanation, it sounds like it says to enter fair market value.  Am I correct?

Do the home improvement, purchase, and selling expenses apply 100% to the cost basis or about 30% to 60%?

Thank you,

[JotikaT2]

In regards to your first question, you will use the original purchase date.  Regardless of how long you actually held the property, you will treat the asset as being held for more than one year. 

In regards to your next question, you are correct, you will use the fair market value taking into account the stepped up basis when entering the cost basis.

Any home improvements made will increase your cost basis.  Selling expenses for the sale will reduce the overall gain, if any, on the sale of the home.

Please see Publication 559 for additional information.