I put in the gross proceeds on the 1099-S from sale of inherited house but no place to deduct my closing costs and mortage payoff. The check I received was considerably less than the gross proceeds

[SweetieJean]

Mortgage payoff is irrelevant

[Critter]

Your cost basis is the inherited value + improvements + cost of sale.

[SweetieJean · Accepted solution]

https://ttlc.intuit.com/questions/2583688-where-do-i-enter-the-sale-of-a-second-home-an-inherited-ho...

[Hal_Al]

In the interview, SweetieJean references, TurboTax will ask for the "Expenses of Sale" That's where you enter the deductible closing costs. In actuality they are not "deducted" but added to your cost basis to reduce your capital gain. Review IRS Pub 523, page 11,  for a list of the expenses you can consider as sales expenses.  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p523.pdf">https://www.irs.gov/pub/irs-pdf/p523.pdf</a>
As others have indicated, mortgage payoff is not a closing cost and is not deducted or added to your cost basis. It is simply not taken into account at all.

[VolvoGirl]

Did you have a mortgage on it or were you paying off the deceased mortgage?  When you inherited it you got a step up in value to what is was worth when you inherited it.  How long did you have it before you sold it?  Did you live in it?