Skip to main content

Income tax reporting and taxes of inheritance of sale of house

Austin, TX |

My dad passed in 2008 living in another state. House was sold in 2009 after some renovations done. Received 1099S from sale of house. Proceeds from sale of house were divided between 3 of us. How do I figure how much I will owe tax wise? Don't have good information from the executor. What do I need so I can file my taxes.

Attorney Answers 3


The basis of the house is stepped up to the date of death value for purposes of calculating gain or loss. You should have received a copy of the inheritance tax return that included the house at its fair market value (FMV) at date of death. You take that FMV and any other improvement made to the house after the date of death and divide it by 3. That is your basis for calculating gain or loss on the sale for each of you. Then report this gain on your Schedule D of your Form 1040.

Mr. Fromm is licensed to practice law in PA with offices in Philadelphia and Montgomery Counties. He can be reached at 215-735-2336 or at the email address listed below. He has received a 9.7 rating from AVVO and recently was featured as a 5Star Wealth Manager in the Philadelphia Magazine, November 2009 issue on page 123.
Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received.
By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.
Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

Mark as helpful

3 lawyers agree


If you received the Form 1099-S personally, with your siblings, then the house must have been distributed from the estate. Otherwise the estate would have received it and reported the sale on its Form 1041 return.

As my colleague correctly points out, the basis in the house was adjusted (up or down) to the fair market value on your dad's date of death. If the estate did not have to file an estate tax return it might not have performed a certified appraisal. However, an executor is remiss for not at least obtaining a CMA (comparative market analysis) from a competent local realtor. If that was not done you and your siblings should obtain one from a local realtor as of the date of death. You split the new basis and the proceeds/gain (if any) on an equal basis.

I assume none of you lived in it and it was not rented out following your father's death (so no depreciation recapture).

Mark as helpful

3 lawyers agree


You should get a copy of the report from the executor for your files. Mr. Fromm's advice about the taxable proceeds is correct. Make sure that you distinguish between renovation expenses (things that increased the value of the house and may be added to basis) and mere repairs, which do not increase the basis.

Mark as helpful

3 lawyers agree

Wills and estates topics

Recommended articles about Wills and estates

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics