Tax Law (Questions About Taxes)/Sale of property with life estate
In 2003 my mother deeded her home to myself and 2 sisters and kept a life estate. In 2012 she moved to assisted living and it was decided by her and us girls that the house should be sold as she could not keep up the expenses. With the possibility of her need to request state aid, we used the Illinois chart to find the percentage associated with her age which was .40295% and the remaining balance was split by the 3 of us. We have just closed on the sale of the house and our question is, will our mother be required to pay taxes on her portion and what will be expected for us girls? The sale price was $53,000.00. We understand there is a gift somewhere here. I know personally I have not reported a gift yet but wonder if now that it sold, is that now considered her gift to me and my sisters?
The recipient of a gift does not file a gift tax return. The donor files a gift tax return. Most likely she will pay no tax but it willl reduce the amount during her lifetime and at death.
I suggest you consult a tax expert. Either an attorney or an Rnrolled Agent.