Yes, you will treat the sale of your inherited house just like a second home sale with the exception of selecting 'I inherited it' as how it was purchased. It should be reported on each of your individual returns because it was distributed to each of you. Each of you would report half of the cost basis and half of the selling price/selling expenses.
This is considered investment property, report the sale using the steps below:
- Under Wages & Income scroll to Investments & Savings
- Select Start/Revisit beside Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
- Select Add Investments or continue to go through the screens to select 'Other' > Continue
- Begin to enter the sale description > Under Type select Other > Under How did you receive select 'I Inherited it' (if applicable)
- For TurboTax Desktop you would enter the description 'Inherited Property' and select 'Long Term' as the hold period
- Enter your sale date and 'Various' as the Acquired date
- Continue to complete the screens until you arrive back at the Wages & Income main page.
Inherited property is always considered to have a long term holding period which provides favored tax treatment.
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