how to correctly enter 1/3 of inherited /sold parents home

[roseyday5]

We (3 beneficiaries) inherited parents home. Home needed lots of work and was sold 'as is' condition. The home was empty for 3 months and sold, as is. The Realtor sold home for $162,000 (divided by 3, $54,000), I used the $162,000 as value at time of death and the sales price. The net proceeds (less closing fees) was $152,269.34 divided by 3 ($50,756.44). Are the $54,000 - $50,756 the numbers I enter into the other investment section to record the inherited home? Would this generate a capital loss? I thought it would be a wash but now I'm not sure. I understand I describe as 1/3 inherited property. I'm not sure if I list 'second home" or 'other' ? Technically none of us were living in the home or using it for personal use  - I guess this is where I'm getting confused. 

[DianeW777 · Accepted solution]

You can correctly enter the sale by using the information here. Based on your information it would make sense that you would show a capital loss on your return and you will use the description as Inherited Property (see below).

If three of  you inherited the home then the cost basis is the fair market value (FMV) on the date of death.  This means that you would split it three ways and it sounds like the selling price would be a good FMV to use as your cost basis because it was sold within three months.

The cost would be entered and the selling price (divided by 3) then one third of the selling expenses.   This information assumes none of the three beneficiaries lived in this house as their home since it was empty and based on your statements.

This is considered investment property, report the sale using the steps below:

1. Under Wages & Income scroll to Investments & Savings
2. Select Start/Revisit beside Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
3. Select Add Investments or continue to go through the screens to select 'Other' > Continue
4. Begin to enter the sale description >  Under Type select Other > Under How did you receive select 'I Inherited it' (if applicable)
5. For TurboTax Desktop you would enter the description 'Inherited Property' and select 'Long Term' as the hold period
6. Enter your sale date and 'Various' as the Acquired date
7. Continue to complete the screens until you arrive back at the Wages & Income main page.

Inherited property is always considered to have a long term holding period which provides favored tax treatment.

[fanfare]

whoever has the closing documents should prepare the report as if there were only one owner.

Then divide all amounts by three and give the numbers to your siblings.

In description include "33.3% share of home".

@roseyday5 

[fanfare]

The Date Acquired is on the date of death, as is the basis.

You can't acquire a home over various dates.

The box category checked determines the holding period. Use Form 8949 Page 2 Box F.

@roseyday5 

[roseyday5]

thank you for your response.

follow up Question:  It's my understanding, if inherited house is not for personal use, it can be considered for a capital loss of closing fees acquired.  However, if I or my siblings resided in the home, it would be considered personal use and not a capital loss ?  

Also, the steps you showed are familiar in the Deluxe software version, however, I'm not certain if all are.  Should I be using the premium version - and would all of these steps be available in the premium version? 

thank you

[DawnC]

Yes on all.  You need Premier or Home & Biz to see the full investment entry screens in the desktop software.   You can still enter it using Deluxe, but you won't get all the on-screen guidance that you would get in Premier or H&B.    

[fanfare]

" if I or my siblings resided in the home,"

Your original post said otherwise.

if one resided, then the other two didn't and my original answer applies for them.

@roseyday5