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Financial Planning / Tax Strategies
|Subject: Re: reporting sale of inherited house||Date: 1/1/2002 9:22 AM|
|Author: irasmilo||Number: 56555 of 121105|
A relative passed away November 8 of 2001, leaving me her home. In her state, the house was "devised" to me immediately via her will. We sold the house and closed escrow two weeks ago.
My condolences on the loss of a loved one.
Although the house is listed as part of her estate for estate tax purposes, I, not the estate, was the actual seller. My name was on the deed and my social security number was used on all the sales documents.
Since I acquired the house right before it was sold, and I step-up my basis to its fair market value at the date I acquired the property, it appears that not only do I have no capital gains, but I actually have a small (but useless) loss, since I could deduct the real estate commission and closing costs from the sales price (which is what the house is going to be valued at for estate appraisment purposes).
First, your step-up in value occurs as of the date of death, not your date of acquisition. In your specific situation, it's unlikely that would change the valuation. Your loss is not useless, why would you think it is? It is a long-term capital loss, deductible on Schedule D. (The holding period on inherited property is automatically long-term. You enter "inherited" for the acquisition date on Schedule D.)
The house obviously is not my principal residence and it not being replaced, so I can't offset the basis of a new property with my "loss."
Correct, but irrelevant, as that option for principal residences was repealed several years ago.
Do I just report the sale on my 2001 1040 for informational purposes, and is my sales price indeed lower than my acquisition price? I know I have no taxable event here (other than the impact on the estate tax, which is not my question), just wondering what I have to report on my own tax return.
You do have a "taxable" event here. You have created a long-term capital loss, and should report so you can benefit from it.
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