Get your taxes done using TurboTax

Yes, you will generate a K1 from the Form 1041 for the interest income. This will then be reported on your individual tax return. 

When the condo is sold the cost basis is the fair market value on the date of death plus the cost of any capital improvements made after you inherited it (not repairs but improvements that are capital in nature). Maintenance expenses would be part of the selling expenses.

If you never lived in it or used it as a personal residence it will be an investment sale and you can report it as follows in 2026.

The expenses of sale will reduce any gain or increase any loss as well. This is entered as the sale of investment property and can be entered as follows.

Enter the inherited property sale in TurboTax using the steps provided.  

1. Open or continue your return: Choose the Search box and type 'sale of second home' then use the Jump to link to enter your inherited sale) or follow the menu. In TurboTax Online select 'See more' in the FAQ then click 'sold second home'.
2. Under Wages & Income scroll to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
3. Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2025? screen
   • If you land on the Your investment sales summary screen, select Add More Sales
4. On the OK, let's start with one investment type screen, select Other, then Continue
5. On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale
6. On the next screen, select  Other (choose this also for inherited homes) then select  I inherited it under  How did you receive this investment? (For TurboTax Desktop you can enter a description of 'Inherited Home' and long term holding period).

Note: If you do or did use it as your personal home or second home, no loss will be allowed and any gain would be taxable.

@LGTX