How to Report a Property Inheritance received in Probate and Sold in 2022

[wsaslow]

My mother passed away in November 2021. Her apartment in Florida was left to my sister and I (50%/50%) after probate which completed in April of 2022.    We sold it within a month or so.  

Do I need to file in Florida?  In the month or so we had it, it probably did not change in value.

We are talking about ~80K, my part after closing and fees, about 35K.

How do I compute my tax exposure?

I have the Deluxe version of TurboTax, do I need to upgrade to file this?

Thanks,

Bill

[DavidD66]

Yes, you will need to upgrade to TurboTax Premier in order to report the sale of the condo.  Your inheritance is not taxable, so that does not need to be reported; however, the sale of the condo has to be reported.  Your cost basis in the condo is the value of the condo at the time your mother passed away.  I think it is a reasonable assumption for an $80,000 condo that there was no appreciation from November to April.  Your cost basis would be $40,000, and the sales proceeds would be $40,000 less the sales costs.  This would result in a net loss, but since the property is considered "personal property" (as opposed to investment or business property) you cannot realize the loss.  Nevertheless, the transaction has to be reported.  You will report that in the same section in which you report stock and other investment sales.  To enter:

• Type "Investment sales" in the search window and click Enter
• Click on "Jump to Investment sales"
• On the page with "Did you have investment income in 2022?"  Answer Yes
• On the page with "Did you have crypto income in 2022?" Answer No (you can revisit this section later if the answer is Yes).  Then click on Continue
• On the page with "Let's import your tax info" click on "Enter a different way"
• Select "Other" to "OK, let's start with one investment type?" and click Continue
• Enter the name of the person or firm that brokered this sale
• On the page with "Now, enter one sale for _______",  for "What type of investment you sold" Indicate "Second Home"
• For "How did you receive this investment?" Indicate "I Inherited it"
• Enter the details of the sale, and the interview will walk you through entering the details of the sale

 You will report the sale as

[Anonymous_]

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@wsaslow wrote:

My mother passed away in November 2021. Her apartment in Florida was left to my sister and I (50%/50%) after probate which completed in April of 2022.    We sold it within a month or so.  

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First of all, you do not need to file anything in Florida since Florida does not levy an individual income tax (nor an estate or inheritance tax).

Also, I agree with @DavidD66 that your basis for the condo is the fair market value on the date of death of your mother, but disagree that it is a reasonable assumption that there was no increase in value between the date of death (November of 2021) and the date of the sale (April-May of 2022).

I happen to live in Florida and can tell you that many areas saw a dramatic spike in real estate prices during the first quarter of 2022. I have no idea whether your condo was impacted but you would need to be able to substantiate whatever dollar figure you use as your basis should it ever be questioned by the IRS.

Although a formal appraisal by a certified real estate appraiser is the only evidence of value the IRS is required to accept, you can probably get away with a competitive market analysis (CMA) from a local real  estate agent.