Basis of House Sale

[kjm1059]

My clients, 2 sisters, had their names put on their parent's property (residential home) in 1991 via a quick claim initiated by their parents.  The house was purchased in 1962 by the parents.  Both parents are now deceased and the sisters sold the house in 2019.

Does the basis of the house go back to original cost?  Does it go back to house value in 1991? 

I prepared the return with basis as original cost, but thought it best to check.

Any comments/recommendations very much appreciated. 

[Terry53029 · Accepted solution]

your clients had the home gifted to them, so their basis is whatever moms basis was, plus any improvements

[kjm1059]

Thank you.  I was thinking along the same lines that it goes back to the original cost.

Thank you for your reply

[BobKamman]

Another case of hillbilly probate.  Were the daughters added as owners, wthout removing the parents?  When did the parents die?  Did the parents continue to live in the house, paying the taxes and insurance, until their death?  Did the daughters live in the home after their names were added?  

Substance over form.  Or, to be safe, pay a lot of taxes you might not owe.