Is the sale of this property a taxable event?

[Fish-A-Holic]

Earlier this year my last surviving parent passed away
after being in a nursing home for about 11 years. The only
asset(s) was her home worth about $76k. The devisees
were myself and my 2 children, her grandchildren.

I was named Personal Representative in her will. Doing the
estate thing, I found that the State of Florida filed a Medicaid
lien for about $140k.

We went to court and filed for Homestead on the property.
The agency for the state which handles Medicaid/Medicare
matters failed to file a timely objection and we (my children
and I) were granted Homestead which, in effect, removed
the property from the estate and made it our personal property.

It was immediately sold and the proceeds divided according
to the original will, which was - I get 1/2 of the entire estate and my
children (the grandchildren) each get 1/4.

I know that if there had been no lien and this had been a "normal"
estate, none of us would have any federal tax liability because of the
inheritance tax threshold. But, since the property was NOT sold as
part of the estate, are we each liable for any federal taxes via
capital gains or whatever?

Thanks........

 

[Paul]

I know that if there had been no lien and this had been a "normal"
estate, none of us would have any federal tax liability because of the
inheritance tax threshold. But, since the property was NOT sold as
part of the estate, are we each liable for any federal taxes via
capital gains or whatever?

You and your children inherited the house at its 'fair market value' as of
the date the last parent passed. There may be some minor gain on the sale
(based on any change in value from the date of death until you sold it), so
take a look at the numbers.

The formula is generally:

Value of the house/land
+ any fixing up costs
+ the sales costs
= your basis

Subtract this from the sales price to see if there is any gains.

Costs like utilities and such do not apply.