Yes, the loss is potentially deductible if you are within the allowable limits for capital losses. Your basis in the inherited home would be the fair market value of the house on the date of death of the decedent. This is typically determined by an appraisal of the property. The difference between the sales price, your cost basis, and any other selling expenses would result in your potential capital loss.
Please see this link for steps to guide you in entering this sale in your tax return.
You can also refer to this link if you have any additional questions on any other property or assets inherited.
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