How do I report the inheritance of a house that was sold two months later for a loss? I inherited it along with my two sisters.

[mandmlewis]

I have the FMV appraisal for the house as of my mother's death, and the paperwork for the sale showing the amount of the sale. Where do I report this in TurboTax Premium?

[MindyB · Accepted solution]

I am sorry to hear of your loss.

An inherited house is considered investment property and you can deduct the loss on the inherited property, but only if there was no personal use after your mother passed away - it was simply held between inheritance and sale). The sale also needs to have been made to an unrelated party in an arm's length transaction. 

Here's how to report your 1/3 of the loss in TurboTax Online:

1. Navigate to Wages & Income > Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) > Add/Edit
2. Add Investment
3. Choose Enter a different way
4. Choose Investment type of Other
5. Add a description
6. You will be asked what type of investment, choose "other". ‌Also, indicate this was inherited.
7. Proceed to enter the rest of the information

[mandmlewis]

Thank you very much for your reply. Just to be sure I've got this right, since I and two siblings inherited the house, would I enter a third of the fair market value (as of the time of death) AND a third of the sale amount since it was split three equal ways? Also, I started to enter it yesterday but didn't see a spot for the day of inheritance, only the day of the sale. Did I miss a field? Mom passed away 2/2/24, the house remained empty until it was sold on 4/12/24.

Thank you very much.

[JamesG1]

Inherited property is always long-term gain or loss.  The date does not have to be entered but retain the information with your other paperwork for your tax return should a tax authority have a question at a later time.

Refer to @MindyB above.  At the question How did you receive this investment, enter I inherited it.

Report only your portion of the selling price and cost basis.  As an example, if the property sold for $300,000 with a cost basis of $330,000, if split three ways, on your tax return report a selling price of $100,000 and a cost basis of $110,000.  Retain all your paperwork.

@mandmlewis