Sale of mom's house

[mkTX]

I had a 'Lady Bird" warranty deed that added my name to mother' s house title so when she died the property ownership automatically came to me.   This allowed me to avoid probate on the house. She died; I sold the house. At closing they had me sign a 1099......will this be income to me? if so can I deduct cost of repairs and selling ? 

[ColeenD3]

Yes, this is income. Since you inherited the property, your basis is the Fair Market Value on the date of death. If you sold it immediately, there may be no gain. Your sales costs are deductible but repair costs are not.

[mkTX]

I was told last year if it was less then $250,000 I would not have to pay taxes.....?  what about remodeling costs? are those deductible?

[mkTX]

my name was on the property deed 4 years before her death......the will did not list the house, it just said, ' all worldly property' goes to  my daughter

[KrisD15]

Real Estate is not a Federal issue. It would be best to speak with a local Real Estate Attorney with a license to practice in the state in which the property was located.   

A Lady Bird Deed in Florida for example, usually means you don't really own it until after the property owner's death. 

The manner of how you and your mother transferred the Title or Deed on the home matters. 

If you sold the property soon after her passing, it would seem that there would be no capital gains since the value of the property would be your basis. 

Example, say the house was 100,000 when your mother purchased it. The property goes under a "Lady Bird Deed" which means it goes directly to you. 

Your mother passes and therefore the value of the property on this day becomes your basis. (BASIS =Your cost or value) 

You sell the property 1 month later for 500,000

There would be no gain on the house since the value of the property when you actually took ownership of it as an inheritance, was probably 500,000. (unless property values sky-rocketed in one month)

Say the value of the property on the day of passing was 400,000 and you spent 100,000 on improvements. Again, your basis would be 500,000.

However as I stated, you should speak with a Real Estate Attorney and also a local Real Estate Agent to determine how the property transferred and what the value was on the day your mother passed away.  

Once you have this information, you can enter the 1099-S into the TurboTax program and the program will compute the tax if any. 

The $250,000 exclusion refers to when the owner lives in the house at least 2 of the last 5 years. If you lived there with your mother and you also owned it, that exclusion could apply. 

If you only owned half the property, the sale MAY need to be reported as half owned and half an inheritance,