You would report it as investment sale.
- Answer “no” to the 1099-B question
- Select Other for What type of investment did you sell?
- Select I inherited for How did you receive this investment?
- Increase the basis (FMV) of the inherited property by the allowable closing costs.
You can deduct the selling expenses from the gross proceed.
Sales expenses include:
- commissions
- appraisal fees
- broker's fees
- legal fees
- advertising fees
- home inspection reports
- title insurance
- transfer taxes or fees
- geological surveys
- loan charges (points) or other fees paid on the buyer's behalf
- any fees for a service that helped you sell your home without a broker (listing fees, promotional fliers, etc.)
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