Sale of inherited home

Forum|Forum|3 years ago
March 15, 2023
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My brother and I inherited our father's house upon his death. We sold the house for $100,000 and the appraisal came in at $130,000. The proceeds were divided equally between the two of us. How do I report the sale for tax purposes? I received a 1099-S at the closing on the house.

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Best answer by Anonymous_

If you did not use the house for personal purposes, then you likely can deduct the loss (a long-term capital loss) assuming, of course, that the appraisal was a date of death appraisal.

You would report the sale in TurboTax in the same manner as you would the sale of a stock, bond, or mutual fund (the Investment Income section of the program).

What were the exact circumstances surrounding the inheritance?

Anonymous_Answer

Employee

If you did not use the house for personal purposes, then you likely can deduct the loss (a long-term capital loss) assuming, of course, that the appraisal was a date of death appraisal.

You would report the sale in TurboTax in the same manner as you would the sale of a stock, bond, or mutual fund (the Investment Income section of the program).

What were the exact circumstances surrounding the inheritance?

DavidD66

Each of you (you and your brother) will report 50% of the sale. To report sale in TurboTax:

Type "Investment sales" in the search window and click Enter
Click on "Jump to Investment sales"
On the page with "Did you have investment income in 2022?" Answer Yes
On the page with "Did you have crypto income in 2022?" Answer No (you can revisit this section later if the answer is Yes). Then click on Continue
On the page with "Let's import your tax info" click on "Enter a different way"
Select "Other" to "OK, let's start with one investment type?" and click Continue
Enter a name for the the person or firm that brokered this sale
On the page with "Now, enter one sale for _______", for "What type of investment you sold" Indicate "Investment Property"
Indicate "Inheritance" for "How did you receive this investment?

You can claim a loss on the sale of your father's house that you and your brother inherited, if each of the following are true:

The house was sold in an arm’s length transaction.
The house was sold to an unrelated person.
You and your brother did not use the property for personal purposes.
You and your brother did not intend to convert the property to personal use before the sale.

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dugott

Thanks for this answer. I'm in the same situation. I entered the amount on the 1099s and then used the appraisal for the basis. It says that there is no exclusion and personal losses are not deductible. Am I doing this correctly?

Anonymous_

Employee

@dugott wrote:

Thanks for this answer. I'm in the same situation. I entered the amount on the 1099s and then used the appraisal for the basis. It says that there is no exclusion and personal losses are not deductible. Am I doing this correctly?

Was the appraisal a date-of-death appraisal? Was the property used for personal purposes?

If there was a loss, it would be deductible (as a long-term capital loss) provided the property that was acquired from a decedent was being held for investment.