How to properly report my portion of condo sale proceeds when 1099-S shows total amount?

So last year my parents and I sold a condo that we co-owned. The thing is, while the total sale brought in around $240,000, I only actually received about $6,800 of that money since my parents got the bulk of it. Problem is, they received a 1099-S form that lists ALL our names on it and shows the entire sale proceeds amount. I'm trying to file my taxes on FreeTaxUSA (since I didn't make much last year and qualify for free filing), but when I get to the section for reporting the sale, it only gives me a field to enter the total amount from the 1099-S. I can't figure out how to indicate that I only received a small portion of the proceeds. Does anyone know how I should handle this? I don't want to pay taxes on money I never received! For context, I was a student living in the condo and paid my parents some rent monthly while they handled all the maintenance costs and HOA fees. Since I was a student there, I don't think it counted as my primary residence for tax purposes. Any advice would be super appreciated!

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20 comments

Douglas Foster

•8M

You're dealing with what's called a partial interest in real property. The 1099-S shows the full amount because that's how the reporting works, but you only need to report your proportional ownership share of the proceeds and the resulting gain or loss. Since you were on the title with your parents, you'll need to determine what percentage of ownership you legally held. Was it 33% (equal with parents)? Or a different percentage? Your actual distribution of funds ($6,800 out of $240,000) suggests you owned roughly 2.8% of the property, but what matters is the legal ownership percentage on the deed. On your tax return, you should report only your percentage of the proceeds, basis, and resulting gain/loss. In the description section of Schedule D and Form 8949, indicate that you're reporting only your ownership percentage of the property sale. Something like "Sale of 33% interest in 123 Main Street" would work.

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Douglas Foster

•8M

If the deed doesn't specify percentages, the default assumption is equal ownership among all parties listed. So if it's you and your parents (assuming two parents), you'd each have 33.33% ownership. If it's just you and one parent, it would be 50/50. For inherited property where percentages aren't specified, the inheritance is typically equal among the named heirs unless the will stated otherwise. In your case, if the deed simply lists all three names without specifying shares, the IRS would generally expect equal thirds.

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Ruby Knight

•8M

After struggling with a similar situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out exactly how to report partial property sales. I uploaded my 1099-S and it analyzed my situation and gave me step-by-step guidance. What I discovered is that you need to report your proportional share of both the proceeds AND the cost basis. The tool walked me through calculating my basis properly, which was the part I kept getting wrong. It also generated a supplemental statement explaining the partial interest reporting that I could attach to my return.

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Ruby Knight

•8M

It definitely works with FreeTaxUSA! That's actually what I was using too. The tool doesn't file for you - it just gives you the calculations and language to enter yourself in whatever software you're using. For complicated situations with multiple owners and different percentages, that's exactly what it's designed for. It generates the specific wording you should use on Schedule D and Form 8949, and even creates a supplemental statement explaining how you calculated your portion that you can attach to your return if needed.

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Logan Stewart

•8M

Just wanted to follow up - I tried taxr.ai for my complicated property sale situation and it was seriously helpful. I was stressing about how to report my portion of our multi-owner property sale, but it guided me through calculating my share of proceeds and basis properly. The best part was it gave me exact wording to use in the description field of Form 8949: "Reporting 22.5% ownership interest of property at [address]" and then showed me how to calculate my portion of everything. Way easier than I expected and my accountant friend confirmed the approach was correct. Just submitted my return through FreeTaxUSA yesterday using their guidance.

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Mikayla Brown

•8M

If you're having trouble figuring out how to report the 1099-S correctly, you might want to try calling the IRS directly. I know it sounds awful - I tried calling them about a partial property sale last year and was on hold for literally hours before giving up. Then I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 20 minutes. They have a demo video here: https://youtu.be/_kiP6q8DX5c that shows how it works. The IRS agent explained that I needed to report my percentage of ownership, not the actual cash I received, since the distribution between owners might not match the legal ownership percentage. They also told me exactly what to put in the description field on Form 8949 and Schedule D.

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Mikayla Brown

•8M

It uses a system that continually redials for you and navigates the phone tree until it gets a human, then it calls you to connect. It's basically doing what you would do if you had unlimited time and patience. The IRS actually has a pretty good system in place once you get through to a real person. The agent I spoke with pulled up publication 523 and walked me through exactly how to report my portion of a property sale. They confirmed that the key is reporting your legal ownership percentage rather than the actual cash distribution.

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Ali Anderson

•8M

I'm eating my words right now. After posting my skeptical comment yesterday, I was frustrated enough to try Claimyr. I figured I'd waste $20 or whatever, but surprisingly it actually worked! Got through to an IRS agent in about 25 minutes (which is LIGHT YEARS faster than my previous attempts). The agent confirmed exactly what others have said here - for a 1099-S with multiple names, you report only your legal ownership percentage of the proceeds and basis. She explained that I needed to add a description on Form 8949 stating "Reporting XX% ownership interest per title" and then calculate all figures based on that percentage. My situation was slightly different (selling inherited property), but the approach is the same. I'm honestly shocked this worked. Hours of my life previously wasted on hold...

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Zadie Patel

•8M

I had a similar issue but with stocks. The key is entering the CORRECT COST BASIS for your portion. What was your original investment in the property? That's super important because you only pay capital gains tax on the profit (sale price minus your basis). For your situation, enter your portion of the sales price as proceeds, then enter your portion of the original purchase price plus any improvements as the basis. Make sure to add a note in the description field explaining you're only reporting your percentage ownership.

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Zadie Patel

•8M

Since your parents added you to the deed as a gift, your basis is what's called a "carryover basis" - meaning you essentially inherit whatever portion of their original basis corresponds to the percentage they gifted to you. For example, if they originally paid $150,000 for the condo and gifted you a 33% interest, your basis would be $50,000 (33% of their original basis). If they made any improvements to the property after purchasing but before gifting your portion, those would increase their basis and consequently your carried-over basis as well.

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Douglas Foster

•8M

No, that's actually incorrect and could cause problems. When multiple people are listed on a 1099-S, the IRS expects each person to report their portion of the sale. If the student was legally on the title/deed, they must report their ownership percentage regardless of how the proceeds were distributed. The $6,800 received isn't a "gift" - it's sale proceeds from an asset they partially owned. Not reporting it would be a mismatch with the 1099-S the IRS received. The parents can't report the student's portion on their return.

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Isabel Vega

•3M

@Haley Bennett - I went through something very similar when my mom added me to her house deed before selling. Since your parents gifted you the ownership interest, you definitely need to report your portion even though you only received $6,800. Here's what worked for me: First, figure out your exact ownership percentage from the deed (sounds like it might be equal thirds if all three names are listed). Then on Form 8949, report only your percentage of the $240k proceeds. For basis, since it was a gift from your parents, you'll use your share of their original purchase price plus any improvements they made before gifting your interest. In FreeTaxUSA, when you get to the 1099-S section, there should be an option to edit or override the amounts. Enter your calculated portion and add a description like "Reporting 33.33% ownership interest per deed" in the description field. The key is making sure your reported numbers match your actual ownership percentage, not the cash you received. Don't stress too much - this is actually a common situation and the IRS sees it all the time with family property sales!

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