Sold inherited home

[bimmerlee]

My wife, who is the only heir, inherited father's home after he passed in 2015. However, she had to wait for the 5 year probate period before she could sell the home. During that time, our son lived in the house until we sold it last year. How do I list the sell of the house in TurboTax?

[ToddL99]

Report the transaction as the sale of a second home.  

The cost basis for the home would be the fair market value as of the date of her father's passing, plus any improvements you made to the property while waiting for probate to clear.

(If the executor chose an alternative valuation date, per 26 U.S. Code § 2032 - Alternate valuation, the cost basis would be determined using the FMV as of the date 6 months after the decedent’s death).

Report the sale of a second home in the Stocks, Mutual Funds, Bonds and Other interview of Investment Income.  When the program asks if you received a Form 1099-B, select "No". Completing the interview will generate Form 8949 and Schedule D. 

See Where do I enter the sale of a second home, an inherited home, or land on my 2019 taxes? for instructions on how to access this interview in either online or desktop versions of the program.  

For the online program, here is a sample of the opening interview screen for "sale of second home ":

[bimmerlee]

Can I do this with the TurboTax Deluxe version that I purchased? Also, where would I get the FMV of the home at the date of death?

[ToddL99]

Unfortunately, you will need TurboTax Premium to report the sale of a second home. A transaction of that nature requires Form 8949 Sales and Other Dispositions of Capital Assets and Schedule D, which are not supported by Deluxe.

Check with local realtors or the tax assessors office to get the estimated FMV at time of of death. If you sold the property within 1 year of the deceased's passing, then the selling price would be a very good indicator of the FMV.