You will want to enter the $275,000 as the sales proceeds, then enter the half of the fair market value and sales expenses/roof repair.
If you or your sister did not use the home for personal use, you will be able to claim the capital loss on your tax return. (It may be subject to the long term capital loss limitation, which does have a carryforward). If you sell or dispose of inherited property that is a capital asset, the gain or loss is considered long term, regardless of how long you held the property.
To enter inherited property as investment sales in TurboTax Premium online:
- From the Federal section, under Wages & Income, select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B, 1099-DA) under Investments and Savings
- On the Let’s finish pulling in your investment income page, click on Add investments.
- On the Save time and connect your financial accounts click on Enter a different way
- On the How do you want to add your docs? click on Type it in myself
- On the OK, let's start with one investment type, click on Other and Continue
- On the Tell us more about this sale, type Inherited Home
- On the Now, enter one sale for Inherited Home, complete the information. Use OTHER for type of investment.
- On the Let us know if any of these situations apply to this sale page, indicate that I paid sales expenses that aren't included in the sale proceeds reported on the form. You can add the sales expenses and cost of roof replacement here.
If you did use the property for any personal use after your mother died, you would not be able to deduct the losses, in the steps above, select Sale of Second Home for Step 7 type of investment.
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