Sale of inherited home > expenses of sale

Collapse
X
 
  • Time
  • Show
Clear All
new posts
  • alaska
    Junior Member
    • Jan 2013
    • 7

    #1

    Sale of inherited home > expenses of sale

    I was dreading having to ask for help on this... I just can't wrap my mind around what makes sense with this.

    Client (& sibling) inherited a home. Neither lived there nor rented it out. They spent a year trying to sell it, as there were issues with it not being 'financeable'. It finally sold. My client was issued a 1099-S for 1/2 of the sale price, which is WAY more than the check that was cut after expenses were paid. I was provided with the settlement statement & divided all expenses in half. I am 2nd guessing what can be counted as expenses of sale. There are the regular commissions, attorney, bank fees- (the house was nearly foreclosed on prior to sale). So, what of the existing mortgage that was paid off? Is this an expense or not? It was paid off out of the sale proceeds.

    FMV on date of death (home & land)$172000 (by tax rolls)

    Sale price $195000

    Existing mortgage payoff $125000
    2nd mortgage payoff $8000

    Other misc expenses (attorney, RE agent, Title Fees, etc) $32000

    State taxes $8000

    These are round #'s- but it gives the just of what I'm looking at. And these are the totals (not divided by half)
    B/T/W the 1099s shows $10000 (1/2 of sales price), and client got a check for less than $10,000.

    Sooooo, I made it difficult- but does she get to use the mortgage as part of expenses? And what about amount remitted to state?

    THANK YOU!!!
  • Twin Turbo Z
    Senior Member
    • Feb 2014
    • 372

    #2
    Mortgages stay out of the equation. $195,000 sales price - the FMV at time of inheritance ($172,000) = $23,000. Now you subtract the attorney fees, realtor fees and any closing costs paid by the sellers. Plus any carrying costs involved in the property, ex. electric, gas, taxes, maintenance etc. Looks like they are in for a loss.
    Last edited by Twin Turbo Z; 02-21-2018, 08:59 PM.

    Comment

    • ATSMAN
      Senior Member
      • Jul 2013
      • 2415

      #3
      Originally posted by Twin Turbo Z
      Mortgages stay out of the equation. $195,000 sales price - the FMV at time of inheritance ($172,000) = $23,000. Now you subtract the attorney fees, realtor fees and any closing costs paid by the sellers. Plus any carrying costs involved in the property, ex. electric, gas, taxes, maintenance etc. Looks like they are in for a loss.
      I seem to recall a handy dandy worksheet in either TTB or Taxtools??
      Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

      Comment

      • TAXNJ
        Senior Member
        • Jan 2007
        • 2106

        #4
        Starting at....

        Originally posted by ATSMAN
        I seem to recall a handy dandy worksheet in either TTB or Taxtools??
        TTB tab 6-2
        Always cite your source for support to defend your opinion

        Comment

        • alaska
          Junior Member
          • Jan 2013
          • 7

          #5
          oh thank God!

          Thank you SO much! I had looked thru my TTB repeatedly as well as looked at the online library (along with IRS site & many others!). I think I was getting hung up on the inheritance part of this. I recall one of my instructors- many moons ago- telling me that I always get hung up on some tiny part of the picture.... I LOVE the worksheets in TTB. Thank you again- have a great season!

          Comment

          • TAXNJ
            Senior Member
            • Jan 2007
            • 2106

            #6
            Send some....

            Originally posted by alaska
            Thank you SO much! I had looked thru my TTB repeatedly as well as looked at the online library (along with IRS site & many others!). I think I was getting hung up on the inheritance part of this. I recall one of my instructors- many moons ago- telling me that I always get hung up on some tiny part of the picture.... I LOVE the worksheets in TTB. Thank you again- have a great season!
            of that salmon from Alaska.
            Always cite your source for support to defend your opinion

            Comment

            • alaska
              Junior Member
              • Jan 2013
              • 7

              #7
              haha

              Originally posted by TAXNJ
              of that salmon from Alaska.
              Haven't you heard? The salmon are gone! Nah, but the commercial fishers have been cut back- hope it turns around. AND hoping someone will grace me with some fresh salmon soon, I can't get out of the office!!!

              Comment

              Working...