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gslayton
Level 3
March 23, 2023
Question

Sale of inherited property

  • March 23, 2023
  • 2 replies
  • 13 views

Taxpayer & son inherited real estate from taxpayers fatherr equally. Son lived in house (no rent) for years. House sold - taxpayer & son shared equally in proceeds. Proceeds reported on 1099-S. Are proceeds taxable. I'm leaning towards not but not sure. Thank you.

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2 replies

Skylane
SkylaneIntuit Community Champion
Intuit Community Champion
March 23, 2023

Each gets stepped up basis when property was inherited. 50% each. Son would be entitled to sec 121 exclusion. TP would pay gain on 1/2 sales price less adjusted basis, etc. 

this assumes your TP did not live at residence for 2 of last 5 years. 

 

If at first you don’t succeed…..find a workaround
    BobKamman
    BobKamman
    Level 15
    March 23, 2023

    Did the son live in the house rent-free before or after inheriting it?  Did he own his half more than two years after grandfather died?

      G
      gslaytonAuthor
      Level 3
      March 24, 2023

      Yes, to both.

      Skylane
      SkylaneIntuit Community Champion
      Intuit Community Champion
      March 24, 2023

      50% stepped up basis for each. IRC 121 for the son.

      If at first you don’t succeed…..find a workaround
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