Taxability of Inheritances by Life Estate AARP Tax Aide Program
Taxability of Inheritances by Life Estate AARP Tax-Aide Program
Taxability of Inheritances by Life Estate
Q: Our parents put their house in our, their children’s, names as a life estate. Both parents are deceased, and we have sold the home. Do we owe taxes? What forms, if any, need to be filed? A: In the circumstances of a life estate, the basis of the ultimate owners is the fair value of the home at the date of the final life-tenant's death. Any difference between that amount and the net-sales price is a taxable gain or loss. Each child's pro rata share of a gain or loss must be reported on Schedule D of each individual tax return. These questions are actual inquiries submitted by taxpayers to our AARP Tax-Aide Program. The AARP Tax-Aide Program is a volunteer-run, free tax-preparation and assistance program offered to low- and middle-income taxpayers with special attention to those age 60 and older. Our volunteers are trained and IRS-certified to understand individual federal-tax issues. Our volunteers provide tax assistance as a public service and cannot guarantee the accuracy of the information provided. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures
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