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Anne
Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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My mom died one week after receiving the proceeds from

Customer Question

My mom died one week after receiving the proceeds from selling her house. She received 319k. She did not have to file taxes because she was receiving retirement below the required amount to file. Her and my dad before he died in 2014 were not paying taxes due to amount of retirement received. Do I have to file a tax return for her since she received these proceeds? She lived in California. I live in Texas.
Submitted: 6 months ago.
Category: Tax
Expert:  Robin D. replied 6 months ago.

Hello

Unless your mother did not meet the "main home exclusion of gain (if she did not own and live in the house for at least 2 of the 5 years prior to the sale) or her gain was more than the exclusion, you do not have to report. An exception would be if a 1099S was issued to her name. You would file to show her exclusion and the true gain. Most likely no tax to pay but a reporting of the sale.

If this was her main home for 2 of the last 5 years before she sold then she could exclude up to $250,000 of gain (difference in cost and sale price). If she inherited half when your father passed away her cost would be half purchase price plus half at fair market value when your father passed.

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Expert:  Robin D. replied 6 months ago.

Checking to see if you responded

Expert:  Anne replied 6 months ago.

Hi Cheryl

I'm Anne. I've been preparing taxes for 28 years and I'll be happy to help you.

First, let me extend my sympathies on the loss of your Mom (and Dad). It is never easy. I know.

I'm not real sure why the other expert "opted out" , since her answer was correct.

As the expert above stated, you would not need to file a tax return unless the GAIN on the sale of the home was more than $250,000, or she did not meet the requirements to use this exclusion (Please see below:)

https://www.law.cornell.edu/uscode/text/26/121

Or

If a Form 1099S was issued (which is pretty rare if one is selling their Principle Residence.)

This is NOT the same as the selling price. This is the difference between the $319K selling price, and your Mother's basis in the home. That basis is calculated as follows:

Original purchase price + ALL improvements made during the time your parents owned/ lived in the home (improvements would include things like adding a room, updating a room such as a kitchen , or a bathroom, and would include new appliances, plumbing, etc) Additionally, she would have inherited 1/2 of the Fair Market Value of the home on your father's date of death.

MOST of the time, the net gain at this point is <$250,000

Additionally, the cost of selling the home is also subtracted from the sales price (things like sales commission, legal fees, painting or "sprucing" up a home for selling it, etc)

If all of the above STILL results in a net gain > $250,000, then you would have to file a final tax return for your Mother

As far as CA is concerned, you only need to file a final tax return for your Mom if she would have normally been required to file. Please see below:

https://www.ftb.ca.gov/individuals/faq/ivr/240.shtml

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