Do we have to pay income/inheritance tax on our proceeds since the home sold for less than fair mark

EM_in_Middle_TN

My siblings and I inherited our deceased parents' home earlier this calendar year (2024).

Using an estate lawyer, we had the local county court transfer ownership of the home into our names (a muniment of title) so we would not have to open probate on such a small estate.

We then *immediately* sold the home for a little less than it was appraised for by a local real estate agent. We split the proceeds of the sale equally between us three siblings. A local attorney's office did the closing.

Question: do we have to pay income/inheritance tax on our proceeds since the home sold for less than fair market value (FMV)?

Thank you in advance for any insights!

MatthewD

Hello,

When you inherit property after the decedent (you parents) passed away, your basis is the value at the time of their passing. So, No you do not have a gain to pay taxes on if you sold the home at a loss.

You should still report the sale on your tax return on the "Investment and Savings" section of the Income menu. When you report the sale, check the "inherited" option for the Purchase Date. Enter your share of the appraised amount as the basis and your share of the sales price minus any closing costs. The sale can generate a loss, which is okay.

EM_in_Middle_TN

Thank you, MatthewD!