Sold my share of an inherited home to my siblings, not sure of next steps

Forum|Forum|6 months ago
February 20, 2026
3 replies
207 views

I think I messed up! My sister and I sold our share of an inherited home to our three siblings in 2023. Our mom passed away almost two years prior, in 2021. Our siblings have been living in the home since her death.

When I prepared my personal tax return for 2023, I did not report anything since I did not have any documentation to trigger me to figure out the taxable amount, if any, as I did not receive a settlement document nor a 1099-S. For whatever reason, I am just now realizing I need to follow up on this outstanding tax reporting omission.

We have the gross proceeds amount, of course. I know the value of the home is stepped up at the time of death.

Does anyone have a suggestion on where to go from here? It is possible there would not be much capital gain but, if there is, I believe it would be reported as long term. Other than that, it seems I'd need to find a resource that would provide a ballpark estimated FMV in 2021?

Not A Product Question

Best answer by JamesG1

The sale of a second home is recorded as the sale of an investment. The sale is reported on IRS Schedule D. It is possible that the sale could be reported as a long-term capital loss. Inherited property is reported as long-term.

If you inherited the property, the cost basis is the value of the property on the date of the decedent's death.

Per IRS Publication 551 page 15, the cost basis of property inherited from a decedent is generally one of the following.

The fair market value (FMV) of the property at the date of the individual's death.
The fair market value (FMV) on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation.
The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes.
The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement.

If you did not receive a Schedule A reporting the estate tax value of property you inherited, your basis in the property can be determined using the appraised value at the date of death for state inheritance or transmission tax purposes.

So if you inherited one-fifth of the property and the property was valued at $500,000 at the time of death, your cost basis would be $100,000.

For the sale of home rules to apply to the sale, you must have lived in the home for two of the five years before the sale. In such cases, up to $250,000 could be tax-free.

@theleeb

RobertB4444

Alumni - Intuit

You are exactly correct. The tax rolls for your area should have a value for the property from 2021. Then you take your percentage of that value and that is your cost basis, just as though you had purchased it and paid that price.

Then you will enter the amount that you received for your share and that covers the sale of the house for 2023. There may not even be a gain, there may be a loss.

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theleebAuthor

Level 3

Thank you for your feedback. You mentioned there could be a loss. Though I have not lived there for decades, it is still a personal residence that a couple of my still siblings live in. Do the tax rules allow me to take a loss in those circumstances?

JamesG1Answer