We inherited a house though a lady bird deed and did not sell it. It will be a second home, how do we file that on our taxes?

[Opus 17]

Simply owning property is not reported.   

If you pay property taxes, you can list those taxes as part of your itemized deductions (up to a total of $10,000 for all state and local taxes).   If there is a mortgage on the property and you assumed the mortgage, you may be able to deduct the interest you pay, if the mortgage was used to buy or improve the property.  

However, when and if you sell the property, you will pay capital gains tax based on the difference between the selling price and your cost basis.  For this type of deed, your cost basis is the fair market value on the date the prior owner died, plus any improvements you make after that date.  So you may want to get a real estate appraisal to save with your other important tax papers until you sell the home.

[KrisD15]

Lady Bird deed is similar to a Life Estate deed, with some differences. The main concern is that the house is "inherited" and therefore of no tax consequence for you on your federal return. (SOME states are now taxing inheritances)

Moving forward, you should get an appraisal done to determine the value of the home on the date of the original owner's death. This is your basis (or cost) which will be needed when you decide to sell the property. 

Your capital gain will be determined using your basis when you sell.

You would also need to know this basis if you ever decide to use this second home as rental property. 

@emfurtney