This is true if the taxpayer inherited the house, but is not true if the house was gifted to the taxpayer during the owner's lifetime.
Also, this is true only if the taxpayer sold the house after inheriting it and never rented it out or lived in it as a personal home. If either of these things happened, the tax treatment will be different.
In most cases, if you sold the home pretty soon after the person's death and didn't live in it, the sale price equals the fair market value, you can deduct the real estate commission from the sales price, and therefore show a small investment loss which can be deducted against your other income. But if the home was gifted or deeded when the owner was alive, or you lived there as a personal home (not counting a brief time you might have lived there to clean it up and get it ready for sale) then the rules are very different.
