GAIN OR LOSS FROM SALE OF INHERITED REAL ESTATE

-A sale of inherited Real Estate could create a deduction

- If you inherit a home or other real estate from a deceased relative, you may actually have a tax loss. Often the heirs inherit the home of the deceased and want to dispose of it as soon as possible to avoid paying ad valorem taxes on an empty house.

When they sell it, they may reduce the price for a quick sale and incur real estate commissions and other closing costs.

You should value your basis in the inherited property at its value on the date of death, which might be a greater value than you received for the sale of the property. A quick and easy way to check its value would be to look at its assessed value on the county tax rolls. If you can't find the tax receipts the values are usually available on the internet. It should be a safe assumption if you choose to value it as if that were your cost.

If you think the tax assessor undervalued it, you might need to get an independent appraisal.

When you report it on your tax return, it goes on Schedule D. Instead of entering the date acquired, enter “Inherited.” For the date sold, enter the actual date title was transferred to the purchaser. Even if you sold it a week after you inherited it, you would report it as a long-term capital gain or loss.

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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.