When estate sells the residence of mom, will I have two different transactions? One for the 25% gain for the kid who moved into the house, and 75% of for other benis sold as investment property?
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rephrase
I need to rephrase my question. I think it was stupid too.
Here is what I think will happen and needs to be done. Since one beni lives in house no deductions for keeping up the house can be paid by estate, it's benis resposibility and RE taxes paid will be deducted by beni if paid in full by him. Since this is a personal residence, this will make any possible loss upon sale non-deductible, right?
What happens once the house is tranferred to 4 benis, each 25% and then sold? Will remaining benis be able to claim loss or will the use as a residence of one beni prohibit the others to not treat it as a residence? -
If the estate sells the house, it will show the long-term capital gain/loss on the K-1's --- 25% to each beneficiary. It will be up to each beneficiary to show the information on their individual tax return accordingly. The bene who lives there will either have a gain of 25%, or a non-deductible personal loss. (You could show this on a supplemental statement for his K-1.)
If the house is transferred into the bene's names, then the bene who continues to live there either should pay rent to the others, or buy out their share. (In fact, he should be paying rent to the estate now.) If the bene does not live in it 2 out of the last 5 years, then full gain exclusion does not apply upon the sale, but he has a non-deductible loss if applicable. The others will have a long-term gain/loss of 25% each on their tax returns if it is sold.Comment
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Thanks, Burke, makes sense. I fully agree with the renting but do not think that is going to happen.Comment
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