If you sell your parents home after the last one passes (parent passed in Dec 06 and home sold in Mar 07). Doing 07 1040 Income tax return (1041 Fiduciary return done in 07). What do you state as the type of property on Schedule D of the 1040. The only type described that I feel is suitable is other tangible property as it isn't my main or second home, but my answer makes a difference in whether the software calculates a loss deduction (sold it at a loss). If I input second home it calculates nothing 0 as taxable. If I input other tangible property it calculates -1500.00 loss.

You CANNOT claim a loss on the sale of the house, because it is personal property. Now, if you rented it and claim the rental income on SChedule E, then you can claim the loss.

You described the property as "inherited real estate".