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Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

Ok. I may have done this wrong last year and might need to file a return. 

 

We inherited a home that was left to 3 people. When the home sold the 3 people split the proceeds. According to what I have been reading everything talks about inherited home to 1 person not three and it is getting confusing. From what I believe I have read we only need to report the difference between the assessed value of the home and the sale price of the home. Any advice on how to report this would be appreciated. I might have to file an amended return for 2020 since the sale was in 2020 and I think I put the information down wrong.

Thanks

 

1 Best answer

Accepted Solutions
Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

Thank you everyone for the help. I ended up needing to put the full amounts in the first screen then putting just our portion of the fees and such on the second screen and then put the portion of the loss for the others on the second screen. When it call calculated out, it came out about $1 off from dividing the full loss by 3. I consider that a win. 

 

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10 Replies
Critter-3
Level 15

Inherited home left to 3 people. How do I put this on a Schedule D.

Each of you at closing should have gotten a 1099-S to report your portion of the sale which MUST be reported on your returns ... failure to do so will result in an IRS letter in a year or two. 

 

Good news is your basis is the Fair Market Value as of the date of death and you get to deduct the cost of sale on the Sch D.  

Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

Sadly, none of us received a 1099-S. The home did sell for less than the appraised value. 

 

Example:

Appraisal was $200,000.00.

Sale Price was $195,000.00

 

Based on that, we have a loss of $5000.00. Do we even need to report this?

Thanks. 

Critter-3
Level 15

Inherited home left to 3 people. How do I put this on a Schedule D.

Profit or not the sale must be reported on a return .... so  WHO sold the home ?    The 3 of you or the estate ?    If the  3 of you  did then each of you  DID get  a 1099-S issued at the closing if none of you lived in the home as a personal residence.  Please check in the pile of paperwork they sent home with you or ask the closing company/attorney.  

Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

The only thing we have in the paperwork with 1099 on it is the following form.

 

Seller Certification for 1099 reporting on the sale or exchange of residential real property. There are 3 copies, one for each seller. There was no estate. This form has the contract sales price at the full amount on each of the forms. 

Paperwork on this was very light. 

JamesG1
Employee Tax Expert

Inherited home left to 3 people. How do I put this on a Schedule D.

The transaction is required to be reported whether or not IRS forms 1099-S were received.

 

It is possible to report a gain or loss on Schedule D.  Many times when the inherited basis equals the market price, there is little or no gain, or even a loss because the sale is so soon after the property is inherited.

 

 

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Critter-3
Level 15

Inherited home left to 3 people. How do I put this on a Schedule D.

That is it ... their version of the 1099-S that was sent to the IRS.   Be happy that you have a loss to deduct on your personal returns ... it is good news. 

Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

Critter-3 and James G1, thank you for the information. I think I put the information into turbo tax wrong last year. 

 

Form 8949 looks like this:

Part 1

(a) Sale of Inherited Home

(b) 10/21/19

(c) 05/15/20

(d) 157,500

(e) 160,000

(f) N

(g) -93,638.00

(h) -96,138.00

 

Line 3 of my schedule D looks the same as D, E, G H

I'm wondering if I should have put G and positive numbers into the program and let the system do the arithmetic. by putting in a negative number it basically is trying to subtract a negative and makes it worse. 

The reason I ask this is because I'm getting a weird information into my 2021 return that I don't understand.

 

Am I on the right track?

 

fanfare
Level 15

Inherited home left to 3 people. How do I put this on a Schedule D.

to do the reporting figure that there was only one person involved.

You should end up with a loss of "$5,000 + closing costs".

Collect the relevant numbers.

 

Then, each of you reports those amounts divided by 3.0.

In description put " 1/3 interest in inherited property"

Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

That you everyone for the help. This is making much more sense and figures are starting to look normal now for 2020. I think I'm going to have to file and amended return to get them right.

 

Now the fun of carry over capital loss. Ugh.

 

 

 

 

Michael_Morris
Level 2

Inherited home left to 3 people. How do I put this on a Schedule D.

Thank you everyone for the help. I ended up needing to put the full amounts in the first screen then putting just our portion of the fees and such on the second screen and then put the portion of the loss for the others on the second screen. When it call calculated out, it came out about $1 off from dividing the full loss by 3. I consider that a win. 

 

View solution in original post

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