Inherited Home

[zeros]

Mom passed away a couple of years ago and left her home to her children. I understand now that it is sold. I think a third party is handling this. They are to receive an amount that is less than their normal percentage. There is some administration cost involved that took a portion of it. I would assume that they would not have to pay tax on this distribution? Would a portion of the administration cost be deductible? Where?

Client coming in soon so I need to know what to do. Thanks.

[taxea]

Whether they need to pay tax depends on each % of basis when mom died vs. % of sale amount. They will have expenses they can deduct including the administrative fees. There may be other issues....did any of them live in the house, etc.

[ChEAr$]

Mom passed away a couple of years ago and left her home to her children. I understand now that it is sold. I think a third party is handling this. They are to receive an amount that is less than their normal percentage. There is some administration cost involved that took a portion of it. I would assume that they would not have to pay tax on this distribution? Would a portion of the administration cost be deductible? Where?

Client coming in soon so I need to know what to do. Thanks.

Remember that you will need the FMV (fair market value) of the house as of date of death.
This of course to measure any gain or loss to be reported by each child.

But be careful of this, too, that those "administrative expenses" may or may not have any thing to do with the house and thus not affect the calculation of gain/loss.

Also if any one child lived in the house that will cloud their particular tax situation.

[dyne]

I contend that IF there was NO personal use of the house by the heirs they would
start with the FMV of the house PLUS the administrative expenses which related
strickly to the sale of the house. This should be reported on schedule D as a long-term
capital gain or loss and any loss WOULD be allowable up to $3,000 for the year.