Find your local Federal and State Tax Office here! Not a government website.

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).

Basically, this “inheritance” to 4 siblings involved preparing the property for sale, and really only 1 of the siblings could afford to pay that cost up front and so will need to be reimbursed for that. The question is when this reimbursement should occur: (A) After the sale in which all siblings get the same percentage, or (B) At the time of Sale.

I think a lot of it is basically what can be deducted and when (and how to make sure it is clear with the IRS, e.g. what forms may be needed and how to prove such deductions), and basically to see if the situation is or is not how I describe below.

For calculating multiplicities sake: if the house sells for $120,000 and if total up-front expenses end up $20,000…

Option A

Split up proceeds evenly

Amount received Deductions Amount taxed
$30,000 – $20,000 $10,000 Sibling 1
$30,000 $30,000 Sibling 2
$30,000 $30,000 Sibling 3
$30,000 $30,000 Sibling 4

Or would this actually be more like this:
Amount received Amount taxed Deductions
$30,000 $30,000 Sibling 1 – $20,000
$30,000 $30,000 Sibling 2
$30,000 $30,000 Sibling 3
$30,000 $30,000 Sibling 4

In addition, after these numbers Sibling 1 is paid back that $20,000

Option B

Split up proceeds including deductions paid to Sibling 1 up-front.

Amount received Deductions Amount taxed
$45,000 – $20,000 $25,000 Sibling 1
$25,000 $25,000 Sibling 2
$25,000 $25,000 Sibling 3
$25,000 $25,000 Sibling 4

A) Please refer your questions to a Real Estate closing attorney.

Sorry, comments are closed for this post.

151 Responses to Click to Tell Us Your Experience At Your Local Tax Office

  1. Please see contact information for the IRS regarding your refund.
    Individuals
    800-829-1040
    7 a.m. to 7 p.m. local time

    Businesses
    800-829-4933
    7 a.m. to 7 p.m. local time

    Non-profit taxes
    877-829-5500
    8 a.m. to 5 p.m. local time

    Estate and gift taxes
    866-699-4083
    8 a.m. to 3:30 p.m. Eastern time

    Excise taxes
    866-699-4096
    ​​​​​8 a.m. to 6 p.m. Eastern time

    Overseas callers
    Use our International Services page.

    Callers who are hearing impaired
    TTY/TDD 800-829-4059

    Requesting a face-to-face meeting for help
    You can make an appointment at an IRS local office to get help. Appointment times vary by tax issues and office locations.

    You can find the office closest to you with our Taxpayer Assistance Locator tool. Once you find your local office, call 844-545-5640 to schedule an appointment.

    IRS offices are closed on federal holidays.

Leave a reply

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

Taxoffices.org is a private website not a government website. If you have questions on your taxes it is always best to consult with a certified tax accountant in your state. The Tax Relief Helpline is NOT A State Government or IRS service and is not affiliated with taxoffices.org.

Call Now ButtonCALL FOR TAX REFUND ESTIMATE