Sale of Inherited house in California

[ccmcsn99]

My wife and her sister inherited a house from their mother in 2017 and the house was appraised at that time.  Her sister lived in the house until her death in 2021, where the sister's children then inherited her portion of the house.  We then decided to sell the house. 

I believe that my wife's cost basis for her portion of the house comes from the 2017 appraisal, but the sister's children's basis comes from the sale of the house.  I have the Escrow Report and a 1099-S from the Escrow Company.  I think I understand the numbers as they apply to my wife, but I am having trouble entering this information into Turbotax Premier.

As suggested in other posts, using the investment section of Turbotax Premier starts off okay, but it seems to dwell only on 1099-B forms and never gives me a chance to enter the 1099-S.  The only place that I find 1099-S entry is for the "Sale of Home (gain or loss)" section.  This almost works since I  do not claim any primary home exemptions - since this was not our primary residence.  However, the California return marks the home as my primary residence, and I worry that this will be a big problem.  So I am kind of stuck...

How should this sale be entered in the Premier edition?  Thanks!

[PattiF · Accepted solution]

You would enter this in your tax return using TurboTax Premier. The sale would be considered a second home.

1. Open or continue your return
2. In the search box, search for sold second home and select the Jump to the link
3. Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2021? screen
   • If you land on the Your investment sales summary screen, select Add More Sales
4. On the OK, let's start with one investment type screen, select Other, then Continue
5. On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale
6. On the next screen, select Second Home (choose this also for inherited homes) or Land and answer the questions to finish entering your sale

• The drop-down boxes can be filled out with the details of the sale

1. Description -address address
2. Date sold - on 1099-S
3. Date acquired - from your records
4. Sale proceeds - on 1099-S
5. Cost basis - initial basis plus expenses of the sale such as closing costs.

Entering the sale a Sale of Second home will clear up the California problem.

[ccmcsn99]

Hi, Thank you for the quick response. 

After going to the "sold second home" link, and answering YES to selling stocks, etc...,  and selecting "Add More Sales",  my version of Turbotax Premier diverges. 

I do not get the investment type, it only goes to a 1099-B or brokerage screen.  I never see a choice for "Second Home".   

I proceeded anyway, as it seemed to take the information, but I am not sure of why it is different, and what unexpected consequences might happen.   

Thanks!

[PattiF]

The directions are slightly different for TurboTax Online and TurboTax Desktop. TurboTax Online is used by 85% of our users. If you are using TurboTax Desktop/CD, you would see a little variation in the questions. 

If the information "took", it must be entered correctly and there will be no unintended consequences. You can check on Schedule D and Form 8949 to see if the results are what you expect.

[ccmcsn99]

Thank you for your help.  I had to continue through the questions, choosing that I did not get a 1099-B form, since I actually got a 1099-S form.  I entered the exact amount of my basis, and later in the process, checked that I had expenses.  That is where I was able to add all of the expenses and charges from the Closing Escrow Report.  I was also able to enter the California Withholding tax in that process, too.  I checked the 8949 form and Schedule D afterwards, and it looked correct.  

Also, as you predicted, the California return was able to process the information correctly, too.

Thank you, again!