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Ellen, Tax Attorney
Category: Tax
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Experience:  25 years of experience helping people like you.
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My father recently died but before he did he set up his house

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My father recently died but before he did he set up his house as a "life estate" deed. He paid 38,000 in 1973 for the house. We sold the house for 250,000. The county valued the house at 237,100 (tax record document). Do my brothers and I get the "stepped up" basis of 237,100? How would the 1099 be issued if there are 3 owners instead of 1? The home was in NC.
Submitted: 4 years ago.
Category: Tax
Expert:  Ellen replied 4 years ago.
Welcome to JustAnswer,

So sorry to hear of your loss. If my answer is not clear to you, please ask me for clarification by using the reply button.

Since your father retained a life estate and transferred the remainder interest to you and your brother, there would be no step up in basis to date of death value. The step up in basis occurs when an asset is transferred upon the death of the decedent. In your father situation he transferred the interest to you and your brother at the time he set up the life estate.

Please use the REPLY button if you have any questions concerning my answer. Otherwise please click ACCEPT so that I am paid by the site for answering.
Customer: replied 4 years ago.

Can I scan in the actual Deed for you to look at to see if your opinion would change? The reason I ask this is I am confused. My father could not put it into a life estate after he died (for obvious reasons). The deed document reads his name under the Granter side and my brothers and I on the Grantee side but at the bottom it states "Subject to the Granter's reservation of a life estate". See attached.


Attachment: 2011-11-04_001125_dads_warranty_deed.pdf

Expert:  Ellen replied 4 years ago.
I did review the deed and my answer stands. Your basis in the property would not be changed due to the death of your father. The property transferred at the time of the deed

I hope that it helps to know this information

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