Message Font: Serif | Sans-Serif
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124215  
Subject: Re: reporting sale of inherited house Date: 1/1/2002 9:22 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
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Correct, but irrelevant, as that option for principal residences was repealed several years ago.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.

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.