Assistance with Inherited Property

Forum|Forum|3 months ago
March 19, 2026
1 reply
214 views

My mother passed away in Sep 2025, my sister, brother and I inherited her home. It sat empty for 2.5 months until we sold it Dec 2025 (planned on using it as a rental). I had rental property insurance on it for that timeframe.

We took a loss ... the stepped-up value was $242,784 however we sold it for $184,500. We split the proceeds but would still have a loss... I think we need the form 8949?

Any help is appreciated

guywong

Level 6

Was the property actually rented out and received rental income? If it wasn't rented out, I probably wouldn't treat that as a rental. If it was rented out, then the sale should probably be reported on a Form 4797, Sale of Business Properties.

Who sold the property, the three of you or your mother's estate/trust? Whose name is on the 1099-S?

If it was sold by the estate/trust, then a Form 1041 should be filed to report the sale.

If title had changed to the three of you and the three of you sold it as undivided 1/3 interest owners, then yes, report your respective share on your own 1040 tax return. If you don't treat it as a rental, then yes, report that on a Form 8949 and check the "F" box. It's long term capital loss.

Add all the selling expenses to your cost basis.

LisaK_TxAuthor

Level 2

Hi,

It wasn't rented out, but we had it open to rent or sell for those 3 months. The sale just happened to happen first.

The property transferred to the three of us and we each have a 1099-S for our portion.

Which way will lower our AGI or give us a deduction or credit?

Thanks!

Lisa

ThomasM125

Level 15

If there was no personal use of the property, you can report as the sale of investment property as follows:

You enter investment sales in the Wages and Income section of TurboTax, then Investment Income, then Stocks, cryptocurrency, Mutual Funds, Bonds, etc... Skip the section where it asks if you want to upload your tax documents. Choose Other as the type of investment you want to enter. You'll come to a screen where you can enter in your sales proceeds and cost basis. Choose Land (other investment purpose) as the type of investment sold. You will get capital loss treatment on form 8949.

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