You will only have income on any capital gain on the sale. If there is a capital loss and this was not the sale of a personal use property (which is not deductible), you can report the loss as a capital loss.
To know the actual amount of the capital gain or loss on this sale, you will need to know not only your sale's proceeds but also your basis in this inherited property. Your basis in an inherited property is usually the Fair Market Value (FMV) at the time of inheritance plus any capital improvements made to the property since inheriting it (all in USD)
Click this link for further information about reporting the sale of a capital asset
- To enter this transaction in TurboTax, log into your tax return and type "investment income (gains and losses)" in the search bar then select "jump to investment income (gains and losses)". TurboTax will guide you in entering this information (see step 6 below)
Alternatively, To enter this transaction in TurboTax Online or Desktop, please follow these steps:
- Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
- Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose what I work on” (jump to full list)
- Scroll down the screen until to come to the section “Investment Income”
- Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section) (see Screenshot #1)
- The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
- Since you did not receive a 1099-B, answer “no” to the 1099-B question
- Choose type of investment you sold - select everything else
- Some basic information:
- Description – Usually the address of the property sold
- Sales Proceeds – Net proceeds from the sale
- Date Sold – Date you sold the property
- Tell us how you acquired the property - inheritance
- Enter the date inherited
- Enter the your fair market value - Fair Market Value of the property at the time of inheritance plus any capital improvements since inheriting it
- If you had a loss, on the question of "Did you use this property for business or investment?" If the inherited house was not used for any personal use (no family member lived in it or used it between the time of inheritance and the sale), you will answer that this was for investment (screenshot 2)
Click IRS answers on Gifts and Inheritance for more information from the IRS on the sale of an inherited house.
One additional note: you may also have a state filing requirement in the state where the property was located even if it was not your home state. If the property sale is not in your home state, you would only need to file a nonresident state tax return in the state where the property was located to report any capital gain on the sale.
I was the executor of an inherited house that was in a trust. I was the executor of the trust and estate and when the house was sold there was only one 1099S issued to me. The questions is the proceeds will be split equally between myself and two other siblings. How do I enter my third into turbo tax?
Thanks for the help in advance
Well you should have gotten tax advice on this BEFORE you sold the house. The IRS will expect the sale to show up on your return because only your name is on the 1099-S.
Now the easiest way to resolve this is for you and the siblings is to complete your in full WITHOUT the sale ... make note of the bottom line. Then go back and ADD the sale and note the new bottom line. Subtract one from the other and divide by 3. That 1/3 is what the sale cost each of you ... so the each owe you 1/3 of the difference ... how you settle up is your decision.
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