Q: Do we report home sale on 2024 or 2025 taxes await final probate docs?
My mother passed away in November 2023, and her will specified that her house would be split 50/50 between my sister and me. As she did not have a living trust, we went through the probate process and sold the house in September 2024. The probate process is not officially closed because the final documents were only filed in January 2025. My sister and I each received money from the sale of the home. Should we claim the sale on our 2025 taxes since the home sold in 2024, or should we wait for the probate to close before filing capital gains taxes?
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- California
- (931) 250-8585
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- Answered
A:
If the estate sold the house then the sale is reported on the 2024 estate tax return.
If you and your sister sold the house then the sale is reported on your 2024 income tax return and her 2024 income tax return.
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- California
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A:
You should report the home sale on your 2024 taxes because the transaction officially occurred in September 2024. Capital gains taxes are based on the date of sale, not on the probate closing date. Therefore, even though probate documents weren't finalized until January 2025, the taxable event took place when the home sold.
When filing, you'll use the fair market value of the property at the time of your mother's passing as your cost basis. This often helps reduce potential capital gains taxes. You and your sister should each report your respective shares of the proceeds separately, reflecting the 50/50 split outlined in your mother's will.
Since the sale was during the 2024 tax year, don't wait for probate closure. If you're unsure about valuation or how exactly to reflect this on your returns, it's advisable to speak with a tax professional to ensure accuracy. Waiting until 2025 to report this could lead to complications or unnecessary penalties.
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