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Question
In 1989 my in-laws did a quit claim deed on their home adding their 3 kids. Mother-in-law died in 2001, Father-in-law was placed in an Alzheimer's unit and died in 2010. We sold the house closing in January 2013.

How do we figure the value when the quit claim deed was done? Without paying for an expensive appraisal I did call the assessors office and got their value for that year. Because of the condition of the house it was only sold for the land value to a developer which was about equal to the assessed value in 1989.

1989: assessed value 134,200
2013: sold 140,000

I looked at the tax forms and no where I could see to say we only owned 1/3 of the property. Do we only enter 1/3 of the figures?

My brother-in-law was paying taxes so we had to pay him back 1/3 of what he paid plus 1/3 the cost of a new furnace a few years ago. No one had been living in the house although my brother-in-law was the only one that had access and used it to store his things there. We live on Social Security so our income is low.

Answer
Charlotte,

Since the house was a gift to the children, the value as of the date of the gift is not relevant.  The children's basis will be a transferred basis from the parents.  But at that point you only owned 20% each as your parents still had an ownership interest, I presume. In other words, the basis is your fraction of the original cost of the house plus capital improvements such as a room addition, central air conditioning, or a furnace.

But now it gets complex.  When your mother in law died, her portion of the house was inherited at the current market value. So you need the value as of 2001 to determine the amount of basis received by each owner after her death.  Same thing for 2010 when the father-in-law died, inherited at FMV as of the date of his death.

Each of you reports your own share on your own Schedule E.  You don't need to reference that it was partial ownership unless there is a 1099-S involved.  In that case, I would say something to the effect of "sale of 1/3 interest in house."

Hope this helps.

John Stancil, CPA

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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