Hello,
My sister and I sold a property that was passed on to us from my mother who had owned the property since 1975. In 2006, six years prior to my mother's death, the title was changed to give my mother a life estate, and my sister and I the remainder. Our mother died in 2012.
Q: Now that the sale has gone through in 2015 and we have split the proceeds 50% - 50%, I am trying to learn about the proper way to determine the cost basis of the property. Given the way the property was transferred to us, is this considered inherited property or a gift? From what I have read, I understand that if it is inherited property we can used a stepped up cost basis by determining the fair market value of the property at the time of my mother's death (2012). However, if it is consider a gift, then we would have to use the original price paid in 1975 to calculate the cost basis.
What is your opinion? Thanks!
My sister and I sold a property that was passed on to us from my mother who had owned the property since 1975. In 2006, six years prior to my mother's death, the title was changed to give my mother a life estate, and my sister and I the remainder. Our mother died in 2012.
Q: Now that the sale has gone through in 2015 and we have split the proceeds 50% - 50%, I am trying to learn about the proper way to determine the cost basis of the property. Given the way the property was transferred to us, is this considered inherited property or a gift? From what I have read, I understand that if it is inherited property we can used a stepped up cost basis by determining the fair market value of the property at the time of my mother's death (2012). However, if it is consider a gift, then we would have to use the original price paid in 1975 to calculate the cost basis.
What is your opinion? Thanks!
Federal Taxes: How is the Basis Determined for the Remainder of a Life Estate
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