Sale of Inherited Home - Multiple family members involved

[mtsd2013]

I have a complicated situation and am looking for guidance.

My grandmother passed away in mid-2004. The ownership of her house/property in Oklahoma moved to her children (five children, so each got a 1/5th ownership). However one of those children (my mom) passed away in the 80's, so her share was actually split among my sister and me, each getting 1/10th ownership. I never lived in the house.

The home was finally sold in 2021. I moved to California 15 years ago (not sure if this affects matters). So I received 1/10th of the sale proceeds (less closing costs and other fees), and received a 1099-S from the realtor. The value on the 1099-S is the gross sale. I received about 10% less in net cash.

While working on my taxes and filling out the investment sale, it's asking for the basis value. From what I have read, the step-up basis is as of the date of death, which was in 2004. Since home values really have only appreciated since then, it looks like I have to pay capital gains tax.

How do I find out what the value was in 2004 of the house? Is there something specific I should get from the State Assessor's office? or something from the realtor that shows this? What would the IRS require of me to back this up? I found the "Market Value" on the assessor's website for 2004 and could get 10% of that value to use, but is that the correct method?

[AmyC · Accepted solution]

First, contact the issuer of the 1099-S and have them correct the form to your 10%.

Second, use 10% of the tax assessor's office as your basis or find local agents and sales information from that time period.

The tax assessor should be online and readily available, if audited. You can always download it and save it with your files.

Well done.

[mtsd2013]

Thank you for the information. I did question the 10% difference on the 1099-S originally, and was told the form has to report the gross proceeds, not the net. So the sale price, less disbursements (I see on the original balance worksheet, disbursements to attorneys, commission fees, title documentation fees). Then the "left over" was disbursed to the family.

[fanfare]

There is no panel in TurboTax for a 1099-S.

you file as follows "10% interest in inherited property".

figure the sale as if there were one owner and then divide all those amounts by 10  on your return.

When a home becomes vested, you (in this case, you and your mom) had to get an appraisal  by a professional appraiser to set your cost basis.