You will report a sale of inherited property on your 2022 tax return.
- How do I incorporate this into my federal and State (VA) taxes?
- You would report a sale of inherited property (see below).
- Do I have to do another filing for my sister in Arizona, 2022 federal and state? (AZ)
- No. Your sister filed her final return in the year of death, 2021. You would file the return for AZ only if the property is situated in AZ. Even if you have a small gain you would be required to file based on the selling price to show the actual gain or loss.
- Review the entry steps for your federal return below.
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'
- Continue to complete the screens until you arrive back at the Wages & Income main page.
Inherited property is considered to have a long term holding period which provides favored tax treatment. Your cost will be the fair market value (FMV) on the date of death. You will add to that the cost of preparing it for sale (upgrades). Other costs would be selling expenses. Other selling expenses will be on the Settlement Statement for the sale. Do not include property taxes or mortgage interest in these expenses.
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