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    redpondranch's Avatar
    redpondranch Posts: 2, Reputation: 1
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    #1

    Nov 3, 2011, 03:55 PM
    Taxes on inherited house sold at a loss
    Five siblings, including myself, inherited my parent's house here in Texas. It was a mess, so we spent a year remodeling it, and it sold in February of this year. However, thanks to the depressed housing market, it sold at less than the amount it was valued at on the tax rolls. How do we report this on our tax return this year?
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    Nov 3, 2011, 05:50 PM
    Did you get an appraisal at the time you inherited the property? That value plus the cost of repair is the cost basis. Not the value on the tax rolls.

    You can't claim a loss if you sold for less than the cost basis.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #3

    Nov 3, 2011, 07:06 PM
    Loss on the home property is not deductible. Your cost basis of the house is the sum of fair market value of the house on the date of inheritance and your cost of improvements. Expenses on repair and maintenance are not included in the cost of improvements.
    redpondranch's Avatar
    redpondranch Posts: 2, Reputation: 1
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    #4

    Nov 3, 2011, 08:07 PM
    I don't know that there was an appraisal done at the time we inherited it... I don't think so. I understood that the real estate agent should be able to provide us with fair market value at the time of inheritance. I understand that the cost of repairs isn't really a consideration, so I suppose that my real question should be "is the difference between fair market value and what we actually sold it for (a loss of about $40,000) deductible?"

    Thanks again.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #5

    Nov 4, 2011, 03:20 AM
    Mukat answered that. You can (and need to) get a professional appraisal for the time of death.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #6

    Nov 4, 2011, 05:18 AM
    Loss on the sale of home property and any personal property is not deductible. Also gain up to $250,000 from sale of qualified home property is not taxable.
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