Possible house sale of property owned by mother and 3 daughters, Mother still alive

[arlo]

If they sold the house the mother lives in which the daughters also own. How would they be affected by taxes.
I am thinking the mother would not have any tax Lia. The daughters would have to pay taxes on any gain.
The daughters gain would be the diff. off original cost and fair market value. Anyone agree?

In looking at older post Burke had post in 2012 that kind of agrees with my thinking.

[ATSMAN]

If they sold the house the mother lives in which the daughters also own. How would they be affected by taxes.
I am thinking the mother would not have any tax Lia. The daughters would have to pay taxes on any gain.
The daughters gain would be the diff. off original cost and fair market value. Anyone agree?

In looking at older post Burke had post in 2012 that kind of agrees with my thinking.

Are they equal owners?

[taxea]

Atsman is right. It depends on each % of ownership/% of basis. Why would Mom not have to pay any taxes? Wouldn't she have a gain on her share?

[David1980]

Atsman is right. It depends on each % of ownership/% of basis. Why would Mom not have to pay any taxes? Wouldn't she have a gain on her share?

Mom could probably use the section 121 exclusion.

[TAXNJ]

Good point

Mom could probably use the section 121 exclusion.

David - good point.
If she meets the definition of sec 121. But limited info in original post so original poster needs or has all the facts.

However, what you suggest may apply depending on all facts.

[kathyc2]

If they sold the house the mother lives in which the daughters also own. How would they be affected by taxes.
I am thinking the mother would not have any tax Lia. The daughters would have to pay taxes on any gain.
The daughters gain would be the diff. off original cost and fair market value. Anyone agree?

In looking at older post Burke had post in 2012 that kind of agrees with my thinking.

If Mom gifted interest to daughters, the daughters basis would be Mom's basis at time of gift plus any improvements since then that daughter(s) paid for.

Mom basis (both now and at time of gift) would be original cost, plus improvements and potential step-up if jointly owned and Dad passed.

[New York Enrolled Agent]

If Mom gifted interest to daughters, the daughters basis would be Mom's basis at time of gift plus any improvements since then that daughter(s) paid for.

Mom basis (both now and at time of gift) would be original cost, plus improvements and potential step-up if jointly owned and Dad passed.

TAXNJ is absolutely correct - the original poster needs to fill in all the details.

Having said that, I infer (perhaps incorrectly) that his wording in the thread title leads to mom having a life estate in the house. If that's the case, there are 4 sellers - mom can (assuming she is eligible) use section 121 for her portion. The 3 sisters will pay tax on a (ST or LT) capital gain. If there is a life estate, Table S and §7520 rates must be used to correctly determine the appropriate % to calculate ownership and basis.

[TaxGuyBill]

If there is a life estate, Table S and §7520 rates must be used to correctly determine the appropriate % to calculate ownership and basis.

Sorry to go off on a Tangent, but: I was wondering about the life estate option, but I don't know how it works. Could you briefly explain how to use the table? Is the "age" when the gift was given? How does one determine what "interest" rate to use? Is there anything else a beginner needs to know about calculating Life Estates 101?

Thank you very much.


EDIT: I probably should have read §7520 before I asked those questions. :-) That explains the age and interest. If you have any other thoughts or tips though, I would appreciate it. Thanks again.