I have talked to at least a dozen different people, including four people at the IRS and two CPA's, and I can't seem to get an unequivocal answer to my question. I inherited my mother's house in late 2007 and sold it at a loss four and a half months later. I have a qualified appraisal to establish the cost basis. Can I deduct the loss on my tax return? The house was empty from the time my mother died until it was sold. No one lived in the house, and I never intended for anyone to live in it or to have any other personal use of the property. I started preparing the house for sale about two weeks after my mother died and then listed it for sale. I have been given three different answers from the IRS: (1) the property was personal use property because it retained its character as such after my mother died (one person at the IRS claims this has been established in the courts) and thus the loss is not deductible; (2) the property was investment property because it was neither personal use property nor business/rental property and there was nothing left for it to be except investment property, amd thus the loss is deductible; or (3) the property had a neutral characterization because it didn't fit into any of the other characterization, and thus the loss is deductible. Two CPA's that I have spoken with say that the loss is deductible because the property was investment property, but there are other CPA's online who have the opposite opinion. One person at the IRS said that in order for it to be considered investment property, I would have had to hold it as such for five years. I don't want to get into trouble with the IRS -- does anyone have a definitive answer to this question -- something that I can absolutely rely on in case of an audit?