Sale of Inherited Home

[haytom]

My mother and my aunt bought a lake house in 1988.  My mother passed away in 2013.  My siblings and I inherited the lake house and we shared it with my aunt (she owned 50%; we owned 50%).  We all used it at various times for vacation.   We sold the house in 2021.  My aunt sold it and had a capital gain. When we inherited the house in 2013 we used the FMV on the day my mom died.  Hence, we sold the property at a loss.  Is our loss deductible  since we all used the property for various vacations.  It was never rented out; no one lived their permanently (it had to be closed up in the winter).  I've read conflicting articles on line and at IRS about whether we can deduct the loss or not since we used the property for personal use.

[Anonymous_]

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@haytom wrote:

I've read conflicting articles on line and at IRS about whether we can deduct the loss or not since we used the property for personal use.

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Just a simple read through how you described the property, how it was held, and its use (and considering there was no other use or reason to hold the property), it is fairly clear that it was being held for personal use.

[Mike9241]

personal loss is not deductible, but those of you who received a 1099-S must report the sale and use the adjustment box on schedule 8949 to eliminate the loss. failure to report by those that got the form will get a bill from the IRS. the IRS will use the sales price per 1099-S and a cost basis of 0 (ZERO) 

[haytom]

I did get a 1099-S.  I entered the info in Turbo tax and it reports it as a loss and does a carryover to next year.     How do I correct that if the loss is not deductible?

[Anonymous_]

If you entered the sale in the Stocks, Mutual Funds, Bonds, Other section, be sure to check the box as shown in the screenshot below.