Splitting Up Capital Gain Among Siblings
Splitting Up Capital Gain Among Siblings Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
My husband and I are selling the house we have been living in for the past 25 years, which belonged to his parents who have both passed away. There was no mortgage on the house. We maintained the property and paid taxes on it all this time. The house was never transferred out of his parents’ names.
— Liz
I’m guessing your husband’s parents died long ago, and that is why you have $200,000 in capital gain on the sale. I’m guessing that in order to sell the home, you’ll have to open a probate proceeding. This will allow you to get the home transferred to an entity such as your parent’s estate so that you can sell it. This transfer won’t affect the value, as that is based on their date of death. Once you have the estate open, you should apply for a tax ID number on Form SS-4 and also file Form 56 with IRS to establish who will be the personal representative of the estate. You may be able to apply online for the ID number; otherwise, submit it to IRS manually. The sale of the home would be reported on Form 1041, and each beneficiary would be given a Schedule K-1 to report their share of the capital gain. With respect to the brother’s death, the right of his heirs to inherit if not decided on morality may be a question decided in probate under your state’s laws. With respect to his basis, it’s questionable if his death would have an impact on his basis in the house. Although he might have had an indirect interest in the house when he died, the fact that there was no estate at the time might mitigate a step-up. Since we have some pundits that read my articles, if I get any opinions on the subject, I’ll let you know.
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: June 26, 2012 George Saenz Bankrate logoThe Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logoThe Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logoEditorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logoHow we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.My husband and I are selling the house we have been living in for the past 25 years, which belonged to his parents who have both passed away. There was no mortgage on the house. We maintained the property and paid taxes on it all this time. The house was never transferred out of his parents’ names.
More On Estate Planning
My husband has five siblings, one of whom passed away two years ago. The fair market value at time of his parents’ death was approximately $100,000, and the value now is about $300,000. My question is how and where to report the approximate $200,000 in capital gain. Does this gain get reported on an estate return, or does it get equally reported on each of the six beneficiaries’ tax returns? Also, how does the deceased brother’s share get reported, which will go to his wife and children? What would their basis be?— Liz
I’m guessing your husband’s parents died long ago, and that is why you have $200,000 in capital gain on the sale. I’m guessing that in order to sell the home, you’ll have to open a probate proceeding. This will allow you to get the home transferred to an entity such as your parent’s estate so that you can sell it. This transfer won’t affect the value, as that is based on their date of death. Once you have the estate open, you should apply for a tax ID number on Form SS-4 and also file Form 56 with IRS to establish who will be the personal representative of the estate. You may be able to apply online for the ID number; otherwise, submit it to IRS manually. The sale of the home would be reported on Form 1041, and each beneficiary would be given a Schedule K-1 to report their share of the capital gain. With respect to the brother’s death, the right of his heirs to inherit if not decided on morality may be a question decided in probate under your state’s laws. With respect to his basis, it’s questionable if his death would have an impact on his basis in the house. Although he might have had an indirect interest in the house when he died, the fact that there was no estate at the time might mitigate a step-up. Since we have some pundits that read my articles, if I get any opinions on the subject, I’ll let you know.