Inherited Property

[NotEasy]

Taxpayer and his brother inherited a property from their deceased father in May 2010. Each of them took 50%. They sold the property in August at a loss, after all the sale expenses.

Would you consider the loss to be capital loss or personal loss? Or say would you consider the inherited property to be investment property or personal property?

[Larmil]

Sounds like a long term capital loss

Taxpayer and his brother inherited a property from their deceased father in May 2010. Each of them took 50%. They sold the property in August at a loss, after all the sale expenses.

Would you consider the loss to be capital loss or personal loss? Or say would you consider the inherited property to be investment property or personal property?

They never used the property for personal purposes did they?

[Dusty2004]

Did they use it personally?

Taxpayer and his brother inherited a property from their deceased father in May 2010. Each of them took 50%. They sold the property in August at a loss, after all the sale expenses.

Would you consider the loss to be capital loss or personal loss? Or say would you consider the inherited property to be investment property or personal property?

Did they live there?

If not I would make it an investment property.

Dusty

[Maribeth]

Taxpayer and his brother inherited a property from their deceased father in May 2010. Each of them took 50%. They sold the property in August at a loss, after all the sale expenses.

Would you consider the loss to be capital loss or personal loss? Or say would you consider the inherited property to be investment property or personal property?

It is investment property, subject to capital gain/loss rules, and your holding period is long term.

Maribeth

[NotEasy]

It is investment property, subject to capital gain/loss rules, and your holding period is long term.

Maribeth

A related question. According to the rule, the original cost basis of the taxpayer is the FMV of the property on the date that his father passed away. But taxpayer and his brother did not do an appraisal of the property on their father's deceased date. So now they can only estimate the FMV of the property on that date. Taxpayer says that since the property was sold only about 3 months later, the FMV on the deceased date must be about the same as what they sold the property for. Therefore, would it be ok to go ahead to use the sale price of the property as the original cost basis too?

[Maribeth]

A related question. According to the rule, the original cost basis of the taxpayer is the FMV of the property on the date that his father passed away. But taxpayer and his brother did not do an appraisal of the property on their father's deceased date. So now they can only estimate the FMV of the property on that date. Taxpayer says that since the property was sold only about 3 months later, the FMV on the deceased date must be about the same as what they sold the property for. Therefore, would it be ok to go ahead to use the sale price of the property as the original cost basis too?

Yes, you have a reasonable assumption that the FMV is the selling price since the date sold is so close to the date of death.

You will have a capital loss to the extent of your closing costs paid.

Maribeth

[zeros]

Long Term?

Why would it be considered long term? Would the purchase date of the prior owner be the date of purchase used to determine this?

[Maribeth]

Why would it be considered long term? Would the purchase date of the prior owner be the date of purchase used to determine this?

Inherited property by definition is long term.

Maribeth