When your father died in 2016, the property is given a new cost (or basis) which is the Fair Market Value on the date of death. So there should be a small gain or loss on the sale.
You also can deduct Selling costs (commissions, closing costs, costs to get the property ready to sell) as selling expenses.
So for example as the property sold for $150K
Selling costs were $5K
net selling price is $145K
FMV on date of death is $136K
Profit would be $8K
You would each be taxed on 1/9 or $1K in my example. If it is a loss you also get the loss.
It is taxed as Long Term Capital gain or loss (due to inherited property) which is more favorable tax treatment.
To enter your "Your Share of Inherited House" sold
Click on Federal Taxes
Click on Wages and Income
Click on I'll choose what I work on
Scroll down to Investments
On Stocks, Bonds, Other, click the start or update button
chose Other and make sure it shows as inherited, and 1/9 of the sales price and costs entered.
Note: all above is true unless the Estate/Trust elects to report the gain and be taxed on the sale.
