Sale of house - 3 owners - 1 lived there - Is it taxed?

[Anonymous]

 I have a case where three people were on the deed of a house -- a father and his two children. The father had 50% and he lived at the residence. The two children and 25% and lived elsewhere.  The house was sold.  Do the children have to pay taxes on their share? 

[MinhT1 · Accepted solution]

Yes, if the house is sold for more than its cost basis. The cost basis is equal to the purchase price plus any improvements you added to the house.

Each child has the report the sale of his/her share (25%) of the house and pay capital gain tax on the gain.

[Critter-3]

Do the children have to pay taxes on their share?   YES they do. 

[Hal_Al]

I'm of the opinion that the tax liability follows the money.. not necessarily the names on the deed. 

Who got the proceeds?

Why are the kids on the deed?

Do they actually have money invested?

If the mortgage was paid off, who's name is on the mortgage?

Who's name and SS # is on  the 1099-S.