Deductions & credits

There are some steps in TurboTax to enter the sale of an inherited home. The steps will be listed and will be easy to follow.

You need to determine the fair market value at the date of death to enter as most of the cost basis. If the death of your mother was in the last year, then the cost basis will be the selling price. There are some costs from the sale that can be added to the basis which may cause a loss which is good tax-wise.

The Title Company did not do a disfavor to you and your siblings by issuing a 1099-S to each of you. It will make it easier to report your taxes.

The information that you need to enter is 

1. Description - Address of house
2. Date sold - Date on 1099-S
3. Date acquired - Date of death
4. Sale proceeds  - Amount on 1099-S
5. Cost basis - Same as sale proceeds plus any expenses paid to get the house ready for sale and some expenses that are listed on the settlement statement can be added to the basis. These include Title fees, real estate commissions documentary stamps, credit report costs, costs of an abstract, transfer taxes, home inspection, flood certificate, and attorney fees.  All of the additional expenses are divided by three and that amount would be added to the proceeds for each sibling.

To enter this in your return:

• Click on the Wages & Income tab
• Next click on I'll choose what I work on
• Scroll down the screen until you come to the section Investment Income
• Chose Stocks, Mutual Funds, Bonds, Other and select Start or Update
• The first screen will ask if you sold any investments during the year, answer 
• Did you get a 1099-B or a brokerage statement for these sales? Answer No
• Tell us about this sale, Click I'll enter one sale at a time
• The drop-down boxes can be filled out with the details of the house sale from the 1099-S and other house expenses listed in No. 5 above. This will be a short-term sale if it was less than a year since your mother died.

1. Date sold - your records
2. Date acquired - from your records
3. Sale proceeds -your records
4. Cost basis - FMV at the date of death plus other expenses listed in No. 5 above.

We are sorry for the loss of your mother.

@emceebe