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My mom passed away 2 years ago. She left her house to myself

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and my two siblings. We...
My mom passed away 2 years ago. She left her house to myself and my two siblings. We settled the estate and put the house in our three names. My sister has been living in the house for the past two years. We would like to sell the house now. Do we have to pay tax on the money we make on the sale, or is that considered part of the estate?
Submitted: 1 year ago.Category: Tax
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12/10/2015
Tax Professional: Richard, Tax Attorney replied 1 year ago
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,791
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Hi! My name is ***** ***** I will be helping you today! It will take me just a few minutes to type a response to your question. Thanks for your patience!

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello

The house is not part of the estate because it was transferred in ownership to the 3 of you.

Each of you will report your portion of the sell on your individual returns.

Your sister that lives in the house may be able to use IRC 121 to exclude gain (up to $250,000 if single ) as long as she owned and lived there for 2 full years prior to the sale date.

Your taxable amount will be the gain. This is the difference in Basis and Sale price.

Your basis is the fair market value on the date your mother passed away. This is called stepped up basis.

If you have no gain then there will be no tax but you still must report.

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago

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.

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