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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 662
Experience:  Years of Experience in Business & Personal Taxes
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I received a portion of money in the sale of my late grandmothers

Resolved Question:

I received a portion of money in the sale of my late grandmothers house (around $24,000.00) and was wondering how I would handle this from a tax perspective when i file my 2013 federal and SC tax returns. Every year I file my taxes jointly with my wife and receive both a w2 and some 1099's due to my consulting business. If you could point me in the right direction I would greatly appreicate it.

Thanks,
Craig C
Submitted: 7 months ago.
Category: Tax
Expert:  DanielleCPA replied 7 months ago.

DanielleCPA :

Welcome and thanks for your question!

DanielleCPA :

Was your name on the title of your grandmother's house after her passing?

Customer:

It was not, my mothers was but my mother passed away before my grandmother did. On the HUD 1, the funds will be dispersed between my father, 2 sisters, and myself. My fathers portion will be split up between my 2 sisters and myself but on the HUD1 i am set to receive 18,706.90.

Customer:

My father will take his portion of the 18,706.90 and devide it and I will receive another 6230.00 give or take.

DanielleCPA :

Ok, please give me a few moments.

Customer:

That will be fine.

DanielleCPA :

The $6,230 from your dad would be considered a gift from him to you and would not be taxable.

Customer:

Since he is gifting out his portion, he will not be taxed, is that a correct statement?

DanielleCPA :

That is correct.

DanielleCPA :

Step back - I meant there is not a tax on him making the gift to you.

Customer:

Also, will I receive a 1099 for the 18706.90 and if so at what persentage would that be taxed at?

DanielleCPA :

You may receive a 1099 for the $18,706.90. Form 1099-S is used to report proceeds from sales of real estate, but is not required to be issued for all property sales.

DanielleCPA :

You will probably be minimally taxed, if taxed at all, on the $18,706.90.

DanielleCPA :

Was the property still in the Estate's name?

Customer:

It was never in the estates name due to the fact that my mother passed away before my grandmother and the will was never changed, according to what the closing atty told us.

DanielleCPA :

Inherited property receives a step-up in basis to the fair market value on the death date of the deceased. This means that there typically no gain on the sale of the property and therefore no tax.

DanielleCPA :

Has the property appreciated in value since your grandmother's passing?

Customer:

no, we actually took a loss on the property. The property was listed @ 99,500.00 and we sold it @ 81,000.00. These were values placed on the property by the real estate agent and not true tax assessments.

DanielleCPA :

If you took a loss on the property, you won't have any tax consequences. If you receive a 1099, then you will need to report it on your tax return, but no tax would be due. You cannot deduct the loss, however, because this is considered to be personal use property and personal losses are not deductible.

Customer:

So, if i understand this correctly, this is treated differently from my actual income and i should not have to pay taxes on the 18k proceeds. I just have to report it and I do am not trying to claim a loss. I just do not want an astromical tax bill for an extra 18k.

DanielleCPA :

Correct. Since it was sold at a loss, you're not going to have any tax bill related to the $18K

Customer:

I will not try to claim a loss. Sorry, cant type and think at the same time obviously

Customer:

so in theory, nothing should change from my tax perspective as I will make roughly the same amount of money both from w2's and 1099's?

DanielleCPA :

Like you said, you can't claim a loss on it. It will be a wash on your tax return. No tax deduction and no additional income.

DanielleCPA :

In theory, yes, you are correct. Your tax perspective shouldn't change as a result of the sale.

Customer:

Thanks for clearing this up for me. I thought my job as an IT Professional is difficult sometimes but trying to interpret tax code is just stressful.

DanielleCPA :

And if I tried to work in IT, it would be very stressful for me.

Customer:

LOL... Thanks again for all of your assistance.

DanielleCPA :

You're welcome!

DanielleCPA :

If you are satisfied with the answer, please accept the answer with a positive rating. If you need anything else, you can always come back to this thread. Have a wonderful day!

DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 662
Experience: Years of Experience in Business & Personal Taxes
DanielleCPA and 6 other Tax Specialists are ready to help you

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