Sold inherited land for less than appraised value. How do I show this loss?
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Sold inherited land for less than appraised value. How do I show this loss?

share of inheritance 1/3
appraised at $345,000
sold for $315,000
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New Member

Sold inherited land for less than appraised value. How do I show this loss?

Because an inherited property is treated as an investment property, you are entitled to claim a loss on this. You would report 1/3 of the sales price & expenses and 1/3 of the cost basis, the amount of the appraisal.

 

To get started on the sale of the home

  • Federal Taxes (Personal if using Home & Business)
  • Wages & Income (Personal Income if using Home & Business
  • I'll choose what I work on
  • Scroll down to Investment Income (even though the house was inherited)
  • Click Start/Update across from Stocks, Mutual Funds, Bonds, Other
    • 3-4 screens in you'll see "Choose the type of investment you sold"
    • Select "Everything Else"
    • Enter the address, net proceeds (1/3)  and date of sale (continue)
      • The 'net proceeds' is after reducing your sales proceeds by 1/3 of any expenses
    • At "Tell Us How You Acquired This Home", select inheritance
    • Enter the date you inherited the house and on the next screen
    • Enter 1/3 the appraised value 
      • You can add to the appraised value 1/3 of any costs to carry the property (ex. taxes) or improve/repair/clean up the property prior to sale.
    • State that you used the property as an investment
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