I have a question on the tax side of splitting up house proceeds from basically an inheritance (actually from property gifted to 4 siblings

Q) I have a question on the tax side of splitting up house proceeds from basically an inheritance (actually from property gifted to 4 siblings by the last wife of the father of those siblings after his death).

A) Sure, I can help you with that. Here are the tax implications of splitting up house proceeds from an inheritance:

• When you inherit property, the IRS applies what is known as a stepped-up basis to that asset. This means that for tax purposes the base price of the asset is reset to its value on the day that you inherited it. For example, if you inherit a house that was worth $100,000 when your parent died, but is now worth $200,000, you will not have to pay capital gains taxes on the $100,000 increase in value if you sell the house immediately.
• If you sell the inherited property after holding it for more than a year, you will be subject to capital gains taxes on any profits you make. The amount of capital gains taxes you owe will depend on your income and the length of time you held the property.
• If you sell the inherited property within a year of inheriting it, you will be subject to short-term capital gains taxes, which are typically higher than long-term capital gains taxes.
• If you are married, you may be able to use the capital gains exclusion to avoid paying capital gains taxes on the sale of an inherited home. The capital gains exclusion allows married couples to sell a home and exclude up to $500,000 of capital gains from their taxable income.

In your specific case, the house was gifted to the siblings by the last wife of their father after his death. This means that the siblings will inherit the house with a stepped-up basis, which will minimize their capital gains taxes if they sell the house in the future.

If the siblings decide to sell the house, they will need to file a Form 8949 with the IRS to report the sale and pay any capital gains taxes that are due. The Form 8949 will require the siblings to report the date of the sale, the purchase price of the house, the selling price of the house, and any capital gains or losses.

The siblings should also consult with a tax advisor to discuss the specific tax implications of selling the inherited house.