Three siblings inherited 1/3 interest in their parents home. One sibling lived in the home for two years after the inheritance, the others did not. The house had a substantial decrease in value since the date of death and has been sold at a loss.
Is the loss deductible to the siblings that did not utilize the home as a residence?
The two who did not live in the house could probably take a capital loss, but the one who lived there could not. However, before I would take this kind of loss on a tax return I would do more research. I have not encountered this situation, but another accountant raised the question and most of the people responding made the same interpretation I did.
I have always taken a loss on inherited property when it is sold for less than the tax assessor's appraisal. Often, if they had an independent appraisal from a licensed appraiser, they might claim a bigger loss.
I recently got my tax appraisal lowered, but later had an independent appraisal which came up with a much higher figure than the tax appraisal board did.
Saturday, February 7, 2009