sale of inherited property - loss?

[jamieinaz]

My mother died in 12/23. My three sisters and I inherited equal shares of her home. The date of death valuation of her home was 432,000. We sold the house for 432,500 in 10/24. We each received a 1099-2 for 108,125. We each received gross proceeds of 97050 due to costs associated with the sale. When I enter these amounts on TurboTax, it does not recognize a loss. Shouldn't I have a loss on Schedule D? 

[RobertB4444]

The costs associated with the sale need to be entered when the sale is entered.  The costs should generate a loss for you.  If you only enter the sale price and the valuation you won't show a loss.

@jamieinaz 

[jamieinaz]

Thank you for your reply. Can you tell me what type of investment this is? TurboTax guided me to call it a second home which it absolutely was not. I did not live in that home or even in the same state. When I change the investment type to "other investment property" rather than the suggested "second home", the loss is recognized.  

[zomboo]

Enter the sale under the Investment Income section, Stocks, Cryptocurrency, Bonds, Other subsection in Turbo Tax. Be sure to indicate that the property was Inherited. Enter Sales Proceeds ($108,125), Fair Market Value at time of death ($108,000), and Sales Expenses ($11,075). This will result in a capital loss of $10,950.

[jamieinaz]

Thank you. I did that. I think the issue with realizing the loss is that TurboTax advises to classify this as a second home and once all that information is entered, you get a screen that says "sorry, you cannot claim a loss on a second home." It's not a second home. I didn't live there.  When I change the investment type to other land, it realizes the loss.  Here is the question and answer in TurboTax:

Where do I enter the sale of a second home, an inherited home, or land on my 2024 taxes?

by TurboTax•1566•Updated 1 week ago•Traducir al español

Because these types of sales are considered investment sales, enter this info in the investment section of TurboTax.

You’ll have to use TurboTax Premium to report the sale of a second home, an inherited home, or land.

1. Open or continue your return.
2. Navigate to the sold second home screen:
   • TurboTax Online/Mobile: Go to sold second home.
   • TurboTax Desktop: Search for sold second home and select the Jump to link.
3. Answer Yes on the Did you have investment income in 2024? screen, then Continue.
   • If you land on the Your investments and savings screen, select Add Investments.
4. Follow the onscreen instructions.

[zomboo]

Are you using the Deluxe version of turbo tax? I am testing my response using last year's desktop version so I don't know how different it is now. You need to delete all your entry relating to the sale of a second home. You sold an investment asset. Go to Wages and Income, scroll down to Investment Income (1099-B or broker statements). Then click Update on the Stocks, Cryptocurrency, Mutual Funds, Bonds, Other line. And the select Other (1099-s). It should be straight forward from there.

[jamieinaz]

Thank you for your reply. I am using online premium version.  Between your answer and my own trial and error, I've figured it out.  It would be nice is TurboTax corrected the answer to the question that is so clearly wrong in regards to sale of an inherited home.  Thanks again.  

[twill3]

I am having the exact same issue..can you tell me how you figured it out??:

thanks!

[zomboo]

I can't help without knowing the details of your situation. Did you read this thread in it's entirety?

[twill3]

I did...I am trying to input the sale of my mom's house which I inherited...when I follow the directions as stated above it doesn't calculate a loss on the sale...it wants me to put it in as a sale of a second home..the only way it calculates a loss is if i put it in as "other" or land sale and then say it is inherited...there is no option for other investment property...help!

Thanks

[zomboo]

That is how you enter it. It is type 'Other' and you inherited it. Under description, enter a short description. I tested it out and reviewed the form 8949, schedule D, and form 1040 generated by Turbo Tax.  Are you not getting the correct results or are you just concerned this might not be the right way to do it? Do you need help with what numbers to enter?

[jamieinaz]

It doesn’t calculate it because the information and instruction by TurboTax is wrong. I fixed it by dumping TurboTax and using a different tax software. You can fix it by classifying it as “other investment” instead of second home sale.