If you sold the house for less that your cost basis in the house was, there is no gain on sale and therefore no tax liability. A loss on the sale of a personal residence is considered a nondeductible personal expense.
The cost basis is usually the fair market value at the time the owner of the house died, or when the house was transferred. If you chose a valuation date of six months after the date of death, the cost basis was determined at the date.
There is no requirement to send a 1099-S. The 1099-S isn't entered directly into the tax return. The information on the form is entered into the investment section. That would be the date the
sale was recorded and the selling price. You will have that information already and can enter that into TurboTax.
- Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
- The first screen will ask if you sold any investments during the current tax year (This includes any asset 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 – Your net proceeds from the sale (usually reported on 1099-S)
- Date Sold – Date you sold the property (on 1099-S)
- Tell us how you acquired the property - purchased
- Enter the your cost basis- cost plus capital improvements less any depreciation deducted or allowable as a deduction less any casualty losses take on the property.
- Date acquired (Just remember that the date acquired should be more than a year before the date sold in order for the sale to get long term capital gains treatment and the lower capital gains rate)
- If you had a loss, on the question of "Did you use this property for business or investment?" If the property was not used for any personal use, you will answer that this was for investment. Otherwise, you will not be able to deduct the capital loss of a personal use capital asset.