[shenry1250]

Inherited my mother's home and found fair market value. Now because of hurricanes and other storms it's been decided to demo the house.

Since it will be sold at a lower price, if the FMV stays the same, the sale will show a higher capital gain.

So, My ? Is; Can the cost of demo be used to reduce any capital gain since now the property is worth less than what the value was at the time of my mom's death?

[smoothy]

You inherit a property at the stepped up value... which is the value at the date you inherit it.

So you are saying a Hurricane destroying it... made it worth a lot more?

[shenry1250]

You inherit a property at the stepped up value...which is the value at the date you inherit it.

So you are saying a Hurricane destroying it...made it worth a lot more?

No, hurricane damaged made it not worth repairing so we are going to demo.
There was no insurance on it.

[shenry1250]

NEVER MIND, LOOKS LIKE I HAD BRAIN F--T & SENIOR MOMENT AT SAME TIME. Forget anything I just asked. Duhhhhhhh

[ScottGem]

You may or may not be able to claim a loss, but clearly you have no gain.

[The Junoo]

When did you inherit it? Special rules apply to property acquired from a decedent who died in 2010. Heirs of individuals who die in 2010 may get a full stepped-up basis, only a partial step-up in basis, or a carryover basis depending on whether the executor made a special election to avoid estate tax for the estate. If you inherited property from a decedent who died before 2010, then, your basis for inherited property from a decedent is LOWER of The FMV of the property at the date of the individuals death OR The FMV on the alternate valuation date, if so elected by the personal representative for the estate.However, the basis for inherited property is generally the FMV of the property at the date of the decedent's death, regardless of when you acquire the property.As your property was damaged or destroyed by hurricanes, you may be able to claim a tax deduction for the loss. These types of losses are considered casualty losses for federal income tax purposes. You can claim a deduction to the extent you are not reimbursed for the loss by insurance or other assistance. The loss you can deduct is your adjusted basis in the property or the decrease in the property's fair market value as a result of the disaster, whichever is less. The amount of the loss would be reduced by any insurance or other reimbursement or assistance you receive, such as qualified disaster assistance payments from FEMA. Your adjusted basis would generally be your original cost, but may be some other amount, depending on how you acquired the property. To this amount you would add the cost of any additions or major improvements. You can determine the decrease in FMV by getting an appraisal of the property after the casualty. You cannot include the cost of the appraisal as part of the loss, but you could claim a miscellaneous itemized deduction for the appraisal. This miscellaneous deduction is subject to the 2% of AGI limit. I guess you need to contact a CPA/EA in your local area for accurate professional help.

[AtlantaTaxExpert]

I agree with Junoo's input, ESPECIALLY his last sentence about getting accurate professional help. In your circumstances, you should NOT be trying to do this one yourself.