To report the sale of Inherited Property within the program, follow the pathway below:
- Federal
- Income - Select my forms
- Capital Gains and Losses (Schedule D)
- Capital Gains and Loss Items
On the capital gains form, you will see several entry boxes:
- Form belongs to: Make sure to select who the inheritance belongs to.
- Description of Property: Enter in a brief description of the property (ex. Inherited Prop.)
- Date Acquired: With an inherited property, you can select the checkbox next to ‘Alternate Option’, then select ‘Inherited- Long Term’, from the drop-down menu.
- Date Sold: The date sold will be the date you disposed of the property.
- Sales Price: The portion of the property that you received.
- Cost: This should be the fair market value on the day of death. You can determine fair market value by comparing the home to similar properties in the same area, contacting your county, or hiring an appraiser.
- Adjustments: You can enter any adjustments needed, such as deductible selling expenses.
What if the property was split with others?
If you are not the sole heir of the property and the sale is split between you and other inheritors, then each inheritor would claim only their portion on their return.
For Example: If two siblings inherit a home of a deceased parent, each sibling would claim their portion of the inheritance on their own individual tax returns. Each sibling would report 50% of the selling cost, proceeds, and basis on the Schedule D. You will need to view your 1099-S (or other tax document) to determine if the form contains the full inherited amount or has already been adjusted to show only your portion.
You can read more about determining the basis of inherited property, here.