Taxes On Sale Of A House?

My mother in law deeded her house to my husband and his sister 5 years ago and retained a life estate. Two and a half years ago she had to go to a nursing home. The house was sold by my sister in law last week and there was a break down in the proceeds as follows: the nursing home received $25k toward her care, my sister in law received $28k and my husband received 25k. Do we just add this to our “income” and pay taxes on this when we file for 2012? We’ve always just filed a standard 1040A as we have moderate income (55k per year) and don’t itemize. Should we consult a tax person or an accountant? Any advice would be welcome, just not sure where to start.

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3 Responses to “Taxes On Sale Of A House?”

  1. Tom says:

    You need professional advice. There are a thousand different things to consider. I am pretty sure you can not use a 1040A.

  2. Judy says:

    Since his mom gave them the house, it was a gift, and they retain whatever her basis was. So not likely that the entire $25K your husband got is taxable.
    What’s been going on with the house the last 2-1/2 years? Sitting empty? Did you and your husband live in it? His sister? Was it rented out?
    Get professional help on this.

  3. Quick Answers says:

    What was the value 5 years ago?
    Did MIL file a gift tax return?
    Without knowing the basis, it’s difficult to determine the LTCG.

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