Yes, the sale of inherited property should be reported and any capital gain is taxable.
Please follow the direction to report form 1099-S:
- Login to your account.
- Select Federal Taxes
- Wages & Income then Income and Expenses.
- Scroll down to Investment Income
- Since you did not receive a 1099-B, 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?
- To deduct your expenses ( there is no separate place to enter your expenses), Increase the basis (FMV) of the inherited property by the allowable closing costs.
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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