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Inherited real estate sale question
Old 12-13-2015, 12:11 PM   #1
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Inherited real estate sale question

My spouse and his siblings inherited their fathers home and land two years ago.
No taxes were due at that time because the estate was not large.

The house and land just sold and everyone received about 60k.

Do we have to pay tax on this money?

Thanks!
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Old 12-13-2015, 01:20 PM   #2
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Value when inherited vs sales price?
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Old 12-13-2015, 01:57 PM   #3
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Same value.
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Old 12-13-2015, 02:23 PM   #4
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Based on your comment of "same value" I would say no tax liability; however, you may have a loss that could be deducted if your share of the closing costs are considered.
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Old 12-13-2015, 02:27 PM   #5
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If the house and land was titled to multiple owners after the estate was settled, and 2 years later it was sold and re-titled again to new owners I would be concerned that the IRS would learn of the sale and expect to see some paperwork. If the value had not changed then there may be a loss to report since the value of the house is reduced somewhat by the costs of selling it, and that loss would result in lower taxes.

I have no expertise here at all and personally would get professional advice.
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Old 12-13-2015, 02:40 PM   #6
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Quote:
Originally Posted by Alan View Post
If the house and land was titled to multiple owners after the estate was settled, and 2 years later it was sold and re-titled again to new owners I would be concerned that the IRS would learn of the sale and expect to see some paperwork. If the value had not changed then there may be a loss to report since the value of the house is reduced somewhat by the costs of selling it, and that loss would result in lower taxes.

I have no expertise here at all and personally would get professional advice.
I wouldn't even bother with professional advice (unless you consider tax software professional advice). TurboTax or whatever will handle it just fine. The sale value minus the value at death would be the taxable amount, so if they're the same then there's no taxes. Like VaCollector said, there may be a loss on the closing costs. But it should be easy to determine during tax time.
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Old 12-13-2015, 02:53 PM   #7
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I wouldn't even bother with professional advice (unless you consider tax software professional advice). TurboTax or whatever will handle it just fine. The sale value minus the value at death would be the taxable amount, so if they're the same then there's no taxes. Like VaCollector said, there may be a loss on the closing costs. But it should be easy to determine during tax time.
A similar thing happened to us in 2010. A house co-owned by DW and her 3 siblings was sold and we used Turbotax to calculate the tax due.

I think the main question is, did it take 2 years to sell the house and settle the estate, or was the estate settled first, and the title of the house transfered to the 4 siblings, then 2 years later sold as a separate event. Not totally clear in the OP
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Inherited house
Old 12-13-2015, 03:27 PM   #8
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Inherited house

At the time of the person's death the house receives a "stepped up basis" to the value at the time of death. Hopefully you had an appraisal at that time.
When the house is sold, there will be a 1099S generated.
I have been through both events. When my wife passed away, I had the house appraised to receive the stepped up basis. I also recorded the value of every stock and fund we owned to the stepped up basis.
When I sold the house, I received a 1099S reporting the sale to the IRS
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Old 12-13-2015, 05:43 PM   #9
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You're going to get a 1099 on the sale if there was a formal closing--on your portion.

When you do your taxes, you'll have to give the "basis" of the house. Just show your percentage of the sale as the "basis" and show the amount of the closing costs. The closing costs will actually be a tax deduction to you as it was a selling expense.

I purchased my sister's half of my mother's house, and I just cut her a check. I was really swapping inherited money for inherited property--and no 1099 was issued.
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Old 12-13-2015, 05:46 PM   #10
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House was transferred to children names and sold two years later. On market for 4 months and then sold. No appraisal done just used tax value. We sold it for about the tax value too.

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Old 12-13-2015, 06:21 PM   #11
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Originally Posted by VaCollector View Post
Based on your comment of "same value" I would say no tax liability; however, you may have a loss that could be deducted if your share of the closing costs are considered.
+1
Is sale value does not exceed original price paid plus sale expenses then there are no taxes.
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