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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15610
Experience:  15years with H & R Block. Divisional leader, Instructor
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MY MOM AND DAD DEEDED THEIR HOUSE TO THEIR TWO SONS IN 2000

Customer Question

MY MOM AND DAD DEEDED THEIR HOUSE TO THEIR TWO SONS IN 2000 THE PROPERTY WAS
FREE OF ALL DEBTS. MON AND DAD LIVED IN HOUSE UNTIL AUG. OF2008 AT THAT TIME
THEY BOTH ENTERED A NURSING HOME. MON DIED FIRST. DAD DIED JULY OF 2015 . HOUSE
WAS SOLD BY SONS OCTOBER 2015. HOW MUCH FEDERAL INCOME TAX IS OWED ON THIS
SALE & HOW DO YOU FIGURE IT?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

The sons would need to explain if the deed property was an outright change of ownership to them (as a gift) or was the deed in relation to a life estate.

If the parent's deeded the property out right to the sons then they count as their basis the cost (plus improvements) of the parents. Their capital gain would be the difference in basis and sale (split between them).

If life estate, they would receive step up in basis to value on date that their father passed away. This could mean no gain (perhaps slight loss due to cost of sale).

It comes down to how the property transfer was actually stated.

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.

Expert:  Robin D. replied 1 year ago.

Did you wish to continue our conversation?

Expert:  Robin D. replied 1 year ago.

Please advise if you need more information or rating in a positive way is acceptable.