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Topic: Paying taxes after selling a house-US  (Read 369 times)

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Paying taxes after selling a house-US
« on: May 08, 2019, 08:50:49 AM »
I didn't know to stick this here or Housing...

As some of you know, my dad died last year. He had a house with a mortgage still on it so I had to sell it.

It's under contract now and his closing attorneys have sent me paperwork. In that bundle is a 1099-S which lists the full sale price for tax reporting purposes.

This freaks me out because the mortgage had to be paid off along with the attorneys, real estate commission and closing costs. I'll get nowhere near that plus the balance is being split 3 ways (me, sister and dad's widow). I might get 10K.

I know I'll have to pay taxes next year on the sale of the house but what should I expect?

 :\\\'(. I'm just trying to get prepared.
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Re: Paying taxes after selling a house-US
« Reply #1 on: May 08, 2019, 08:56:38 AM »
As the home was part of your dad's estate, the taxes should be paid before any money is divided amongst you and your siblings.  Your estate lawyer should be able to guide you through this quite easily - I'm sure it's very common.  Don't worry until there is something to worry about!


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Re: Paying taxes after selling a house-US
« Reply #2 on: May 08, 2019, 09:04:28 AM »
I hope so! I just want this over at this point  :-\\\\
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Re: Paying taxes after selling a house-US
« Reply #3 on: May 08, 2019, 11:25:33 AM »
As the home was part of your dad's estate, the taxes should be paid before any money is divided amongst you and your siblings.  Your estate lawyer should be able to guide you through this quite easily - I'm sure it's very common.  Don't worry until there is something to worry about!

I agree.  When each our father's died their houses were sold as part of their estate and the proceeds distributed among their children. Both myself and my wife received our share from the estate free of tax since the estate was responsible for the payment of any taxes due.
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Re: Paying taxes after selling a house-US
« Reply #4 on: May 08, 2019, 11:37:30 AM »
I agree.  When each our father's died their houses were sold as part of their estate and the proceeds distributed among their children. Both myself and my wife received our share from the estate free of tax since the estate was responsible for the payment of any taxes due.

Did you have to do a 1099S? Would it matter that I'm executor?
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Re: Paying taxes after selling a house-US
« Reply #5 on: May 08, 2019, 11:43:46 AM »
Did you have to do a 1099S? Would it matter that I'm executor?

The house sales were in England while we were living in the USA so no 1099-S but the same principle applies. As the executor you are responsible for filing a tax return on behalf of the estate.  In the case of my and my wife's fathers a lawyer was nominated as the executor and he filed the tax return.

Unless the capital gain on the house exceeded the $500k allowance for a primary residence there should be no tax to pay. (I'm assuming this was his primary home)
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Re: Paying taxes after selling a house-US
« Reply #6 on: May 08, 2019, 11:58:36 AM »
The house sales were in England while we were living in the USA so no 1099-S but the same principle applies. As the executor you are responsible for filing a tax return on behalf of the estate.  In the case of my and my wife's fathers a lawyer was nominated as the executor and he filed the tax return.

Unless the capital gain on the house exceeded the $500k allowance for a primary residence there should be no tax to pay. (I'm assuming this was his primary home)

It was his primary home. His widow filed his final return when she did hers as they had been filing jointly before. The sale price is 105K. Just wanted to make sure I'm understanding everything. Thank you!
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Re: Paying taxes after selling a house-US
« Reply #7 on: May 08, 2019, 12:33:27 PM »
@durhamlad what about form 1041? I had to apply for an estate tax payer number and got one but it says I have to file a 1041 by middle of August.
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Re: Paying taxes after selling a house-US
« Reply #8 on: May 08, 2019, 01:46:35 PM »
@durhamlad what about form 1041? I had to apply for an estate tax payer number and got one but it says I have to file a 1041 by middle of August.

I’m not familiar with the 1041 but it looks like it is the form to be filed for the estate, separate from the deceased individual’s tax return.

https://www.irs.gov/businesses/small-businesses-self-employed/deceased-taxpayers-filing-the-estate-income-tax-return-form-1041

Why not try filling it out to determine if the estate owes any taxes. Income from the estate happens after the person has died and his assets generate income.

Instructions :

https://www.irs.gov/businesses/small-businesses-self-employed/deceased-taxpayers-filing-the-estate-income-tax-return-form-1041



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Re: Paying taxes after selling a house-US
« Reply #9 on: May 08, 2019, 01:55:19 PM »
I’m not familiar with the 1041 but it looks like it is the form to be filed for the estate, separate from the deceased individual’s tax return.

https://www.irs.gov/businesses/small-businesses-self-employed/deceased-taxpayers-filing-the-estate-income-tax-return-form-1041

Why not try filling it out to determine if the estate owes any taxes. Income from the estate happens after the person has died and his assets generate income.

Instructions :

https://www.irs.gov/businesses/small-businesses-self-employed/deceased-taxpayers-filing-the-estate-income-tax-return-form-1041

Ok. Thank you for all your help!
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Re: Paying taxes after selling a house-US
« Reply #10 on: May 08, 2019, 02:39:32 PM »
My dad died in 2017 in the USA, and my brother and I inherited. His house was owned outright, and not sold until mid-2018. We each received a 1099-S showing our share of the proceeds based solely on the selling price.

His estate was well under the threshold for federal estate tax and he lived in a state with no state inheritance tax. My brother was the executor, and the accountant who had done my father's federal and state returns for years prepared the final returns for 2017.

My brother (US person) and I (dual national) paid no US tax on the proceeds of the sale. In addition to other forms that I always file, my 2018 return included a Schedule D and Form 8949. The adjustments on the Form 8949 included RE commission, and other costs associated with the sale. We actually had a paper "loss" as the house sold for slightly less than its tax value, which was the relevant value for our "basis".

Generally you won't pay any tax on the sale of inherited property unless you get lucky and make a substantial gain. Hope this helps.
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