Where do I report sale of inherited house in Turbotax?
Selling an inherited house can be a significant financial event, and accurately reporting the sale on your taxes is crucial. If you’re using Turbotax to file your taxes, you might be wondering how to report the sale of an inherited house. This article will guide you through the process and provide essential information to ensure your tax return is accurate and compliant with the IRS regulations.
Understanding the Inheritance Tax Rules
When you inherit a house, the value of the property is generally stepped up to its fair market value on the date of the decedent’s death. This means that if you sell the inherited house, you will be taxed on the difference between the sale price and the stepped-up value, rather than the original purchase price. It’s important to understand this rule because it affects how you report the sale on your taxes.
Reporting the Sale on Turbotax
To report the sale of an inherited house on Turbotax, follow these steps:
1. Access the Home Selling Section: In the Turbotax program, navigate to the “Home Selling” section. This is where you will enter information about the sale of your inherited house.
2. Enter the Sale Details: Provide the sale price of the inherited house, the date of sale, and the address. Make sure to enter the correct information to ensure accuracy.
3. Report the Stepped-Up Basis: Enter the fair market value of the inherited house on the date of the decedent’s death. This value is typically found in the decedent’s estate tax return or the property’s appraisal.
4. Calculate the Gain or Loss: Turbotax will automatically calculate the gain or loss from the sale. If you have a gain, it will be added to your income; if you have a loss, it may be deductible.
5. Check for Exceptions: In some cases, you may be eligible for certain exceptions or exclusions, such as the $250,000/$500,000 capital gains exclusion for married couples filing jointly. Be sure to review the guidelines provided by Turbotax to determine if you qualify for any exceptions.
6. Review and File: Once you have completed the necessary information, review your tax return for accuracy. If everything looks correct, you can proceed to file your taxes.
Seek Professional Advice
While Turbotax provides a user-friendly interface for reporting the sale of an inherited house, it’s essential to understand the nuances of tax laws and regulations. If you’re unsure about any aspect of reporting the sale, it’s advisable to consult a tax professional or financial advisor. They can provide personalized guidance and ensure that your tax return is accurate and compliant with the IRS requirements.
In conclusion, reporting the sale of an inherited house on Turbotax involves understanding the stepped-up basis, entering the necessary details, and calculating the gain or loss. By following these steps and seeking professional advice when needed, you can ensure that your tax return is accurate and compliant with the IRS regulations.
