If the property was immediately sold after the death, then you probably will not owe any taxes on the transaction, however, you are required to report the sale of inherited property.. TurboTax will calculate the taxability of the sale based on the information entered.
Steps to report the sale of inherited property below:
- Click on Wages & Income.
- Click on Show more beside Investment Income.
- Click on Start (or revisit) beside Stocks, Mutual Funds, Bonds, Other.
- Click on Add Sales.
- Answer No for "Did or will you receive a 1099-B...?"
- Follow the prompts to enter the sale.
When you inherit property after the owner dies you automatically receive a "stepped-up basis." This means that the home's cost for tax purposes is not what the now-deceased prior owner paid for it. Instead, its basis is its fair market value at the date of the prior owner's death.
Use this link for more information on basis of inherited property. Sale of Inherited Property - IRS
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