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I inherited a house from my mom, with my brother. My mom signed a deed to my brother, but he did not file it. After she died he

San Francisco, CA |

gave me my share of the estimated value of the property, $50,000. He wanted to keep the home, and I did not care, so he basically bought me out. This money represents my inheritance, is it taxable?

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Attorney answers 4


Yes the money is taxable. But the larger question is how did you inherit the estate? If there was no Trust, then the estate had to be probated and neither you nor your brother had any legal authority to conduct the affairs of her estate. If it was in a trust, then you had a right to receive a full accounting of the trust.

James P. Frederick

James P. Frederick


Based on the facts, the deed was signed adding the brother, prior to their mother's death. I do not see any tax consequences for asker, under these facts.



Correct, yes mom signed a deed to brother prior to her passing.


No, this would not be taxable, at least, not to you. Your brother should file a gift tax return. It should not be taxable to him, either, but he should still file the return. You are lucky to have a brother who is more interested in you than in the money. MANY people would have told you that you were out of luck. We see those kinds of fact situations on Avvo every day.

James Frederick

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This is a little complicated because you need to figure out the basis of the property. If your mom retained possession notwithstanding the deed, the property would be part of her taxable estate and entitled to a step up in basis. If the gift was complete and your mom did not retain ownership of the property then, there is a carryover basis in the property.

As to the transaction between you and your brother, there are several ways to look at that. 1) He bought out your claim to your share or 2) he gave you a gift essentially out of guilt. QUESTION - did your mother intend to gift the house to your brother or was it given to him for convenience and intended for both of you.

Again, the answer to your question, in my opinion, will turn on 1 or 2 above and what the basis in the property was.

I am sorry that I cannot get you closer to an answer but I do not give tax opinions to non-clients. In addition, the IRS will not accept reliance on a statement on these boards if they take issue with your manner of reporting.

That said, I dont see the $50,000 as being income, but there could be capital gains issues.

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It's an unusual situation. Was his deed ever filed? If so, he basically made a $50K gift to you which shouldn't be taxable, but he should file a gift tax return. If the will was probated, you each received a share, then the house would be inherited at a stepped-up basis. Assuming the $50K was at or below market at the time of death, then again no taxes.