Hello and thank you for using Just Answer,If you father transfered the ownership to you and siblings in 2007 then you do not count this a s inherited property. Your basis is whatever your father's basis would be (cost plus improvements) and any improvements you and siblings made over the time of your ownership.If the home was part of a farm and you did not (any of you) live on the farm yourselves you may not exclude any portion of the home (if a gain). If a loss then you can count the sale as sale of farm and any loss would be allowed to each of you.
I would suggest you use a competent tax professional to show the sale of the farm, as each of you will show the portion on your personal returns that was your part of ownership.
Sorry* If your father * no you father (typing too fast I think)
Thank you for the reply...The house sale is not part of the farm...the farm income/loss is ours(one of the brothers) not involved with the sale of the home.
Is there any way to increase the basis without having documentation. Is the Fair Market Value at time of sale useable for cost basis?
No, the purchase by your father would be the basis. You need to look abck to when he purchased the home. This is because he essentially gifted the property to you. Had he waited and you inherited the property, you could use fair market value on date of death. When you gift property, the person you give it to, retains your basis. Maybe you can look back to some paperwork he would have kept or old property taxes listing value (the county would have those).
I know your task is daunting to find the basis, but if you do not show the basis and account for it, the IRS will say it had basis of $0 and you would pay tax on all the sales price (for your portion).
If your father did this just 5 years ago, he would have been requird to file gift tax (reporting really probably no tax due). If you have his old tax return for that year, it would have a form 709 showing the amount.
The only way to increase the basis is to count all the improvements done over the years. These would be room additions, landscaping, new roof...
Robin, Thank you for your response. The property was deeded to us and recorded at the local courthouse. No formal gift transfer was done...does that make sense. At any rate, I believe you have answered my question. We do have the deed for the original amount of the purchase of the property.
I believe that will be all I need for the present. Thank you.
Fantastic (about the deed). The transfer needed only to be recorded to be formal gift under tax rules.
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