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fjeld1228
New Member

How do I adjust the basis on a house I inherited in 2004, improved in 2010, and sold in 2018?

I inherited the house in 2004.  The FMV at that time was $175,000.  My sister lived in the house from 2004 until her death in 2018.  Between 2008 and 2010, I made improvements (bathroom, kitchen, HVAC)  totaling $50,000.  In 2018, I sold the house for $215,000.  How do I adjust the basis (which Turbotax says is the FMV in 2004) to reflect the costs of the improvements?

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Accepted Solutions
Coleen3
Intuit Alumni

How do I adjust the basis on a house I inherited in 2004, improved in 2010, and sold in 2018?

If you allowed your sister to live there rent free or for less than Fair Rental Value, then it is your second home. YOu begin with the (FMV in 2004) basis and add the cost of improvements. This gives you a new basis. Contrast it to the sales price plus expenses of sale.

You can't deduct a loss on personal use property.

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3 Replies
Coleen3
Intuit Alumni

How do I adjust the basis on a house I inherited in 2004, improved in 2010, and sold in 2018?

Did you rent it to your sister at Fair Rental Value?
fjeld1228
New Member

How do I adjust the basis on a house I inherited in 2004, improved in 2010, and sold in 2018?

I did not charge her any rent.
Coleen3
Intuit Alumni

How do I adjust the basis on a house I inherited in 2004, improved in 2010, and sold in 2018?

If you allowed your sister to live there rent free or for less than Fair Rental Value, then it is your second home. YOu begin with the (FMV in 2004) basis and add the cost of improvements. This gives you a new basis. Contrast it to the sales price plus expenses of sale.

You can't deduct a loss on personal use property.

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