Per IRS Tax Topic
409-Capital Gains and Losses : Almost everything you own and use for personal
or investment purposes is a capital asset. Examples include a home, personal-use items
like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference
between the adjusted basis in the asset and the amount you realized from the
sale is a capital gain or a capital loss. A gain on the sale is
reportable income, but a loss is NOT deductible.
Form 4797, Sales of Business Property, is used to report the sale of business property. Unless you had this as a rental or business, the sale should be reported on Schedule D, Capital Gains and Losses.
The sale of an
inherited home is entered in the investment section of TurboTax.
Follow these instructions:
1. Open your return in TurboTax.
2. In the search box, search for sold second home (use this exact phrase) and then click
the "Jump to" link in the search results.
3. Answer Yes on the Did You Sell Any
Investments? screen.
o If you land on the Here's the investment
sales we have so far screen,
click Add More Sales.
4. Answer No to the 1099-B question.
5. On the next screen, select Second Home (choose this also for inherited homes)
or Land. Click Continue.
6. Follow the on-screen instructions to
completion.
The basis of property
inherited from a decedent is generally one of the following:
The fair market value (FMV) of the property on
the date of the decedent's death.
The FMV of the property on the alternate
valuation date if the executor of the estate chooses to use alternate
valuation. See the Instructions for Form
706, United States Estate
(and Generation-Skipping Transfer) Tax Return.
Report the sale
on Schedule D (Form 1040), Capital Gains and Losses, and on Form 8949, Sales and Other Dispositions of Capital Assets:
- If you sell the
property for more than your basis, you have a taxable gain.
- For information on how
to report the sale on Schedule D, see Publication 550, Investment Income and Expenses.
