Sale of Inherited Home
Sales of real estate are
usually reportable on your tax return, especially if a form 1099-S is
issued. There will most likely be no capital gain and therefore no tax.
Any capital gain would be on the difference between what the house was worth on
the date of the decedent's death (your "cost basis") and what the house
sold for.
The house was "investment
property", since it sat vacant, you can deduct the loss.
Type> 1099-S, sale of property other
than main home <in the find (search) box. Click Jump to. Say no when asked
if you got a 1099-B. Then follow the rest of the interview.
You have
an investment property. The carrying costs (e.g. insurance &
utilities) of investment property are deductible as investment expenses, but
are subject to being a misc. itemized deduction also subject to the 2% of AGI
threshold. Real estate (property) tax may be deducted on schedule A,
under taxes, without regard to the 2% rule.
Alternatively,
taxpayers can elect to capitalize (add it to your cost basis) the
carrying costs of unimproved and nonproductive real property, real property
under development or construction and personal property before its installation
or use (Regs. Sec. 1.266-1(b)(1)).
Mortgage interest is only deductible to the
extent of other investment income and not subject to the 2% of AGI rule,
but can be capitalized.
If each sibling gets his own 1099-S (and you should as the closing agent to do it that way), they each report it that way. If only one of you gets a 1099-S; the other two can report their one-third anyway. The one getting the 1099-S will have to make an adjustment at the TurboTax Entry screen. There are a couple of ways of doing this, but the easiest is to just reduce the cost basis (110,000) by the capiatl loss reported by the other two.
