In 1984, my mother (now deceased) signed over title to her house to her 4 children. The house was eventually foreclosed upon and sold for the back taxes. This resulted in unclaimed funds from the sale of the house for whic we have put in a claim. Is this taxable income?
1 Answer from Attorneys
Possibly. If the funds represented sales proceeds, they must be compared to house's basis (the original cost plus any improvements) and the differential, if any, representes potential taxable income. If the house were the principal residence of anyone, his/her share may become non-taxable under the rules for sale of a personal residence. If the house were not the principal residence of anyone, there could be a taxable gain, or possibly a tax loss. More information is needed to provide a better response. This is a response to an Internet question and the reply is not intended to be legal advice or as creating an attorney-client relationship. Different or additional facts not presented could change the response.
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