: Do I have to pay tax on cash my brother is paying me for my half interest in a shared house? My father recently passed away. His house was paid off and it was willed to me and my brother 50/50. However, prior to him passing,

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When one is gifted a home, gifted, not bequeathed, the cost basis follows. i.e. The cost of the house, plus documented improvements, if any, is the basis of the house. Say it was K. Your half had a K basis, and you sold it for K. You owe tax on K profit. "Recently" implies less than a year, so this gain is short term, ordinary tax rate.

In theory, when the house was quit-claimed, a Form 709 (gift tax) should have been filed. In reality, the 0K simply goes against his lifetime M+ and no tax due, and few know enough to file this form. I am sorry for your loss.

UPDATE - The article titled Adjustments for certain gifts made within 3 years of decedent’s death suggests that there is a window of time that would negate the bad outcome I suggest. A nice way out, thanks to @littleadv for pointing this out. News to me.