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Inherited real estate sale question
12-13-2015, 11:11 AM
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#1
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Dryer sheet wannabe
Join Date: Dec 2015
Posts: 18
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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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12-13-2015, 12:20 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 4,172
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Value when inherited vs sales price?
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12-13-2015, 12:57 PM
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#3
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Dryer sheet wannabe
Join Date: Dec 2015
Posts: 18
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Same value.
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12-13-2015, 01:23 PM
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#4
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Full time employment: Posting here.
Join Date: May 2007
Posts: 549
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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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12-13-2015, 01:27 PM
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#5
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,050
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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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Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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12-13-2015, 01:40 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
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Quote:
Originally Posted by Alan
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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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.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
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12-13-2015, 01:53 PM
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#7
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,050
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Quote:
Originally Posted by harley
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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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
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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12-13-2015, 02:27 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Santa Paula
Posts: 4,068
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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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12-13-2015, 04:43 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 6,002
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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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12-13-2015, 04:46 PM
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#10
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Dryer sheet wannabe
Join Date: Dec 2015
Posts: 18
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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.
Thanks!
Sent from my iPad using Early Retirement Forum
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12-13-2015, 05:21 PM
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#11
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Full time employment: Posting here.
Join Date: Aug 2015
Posts: 550
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Quote:
Originally Posted by VaCollector
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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+1
Is sale value does not exceed original price paid plus sale expenses then there are no taxes.
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