I inherited a house. Is my inheritance taxable?
Most inheritances are not reported as taxable income on your tax return. However, a house that is inherited does need to be reported on your tax return when you sell the house. There usually will be very little gain or no gain on the sale of an inherited home.
Your cost basis in the house will usually be the fair market value of the house on the date of death. For example, if the house had a value of $100,000 on the day your loved one passed away, then your cost basis in the house is $100,000. If you hold the house for a few months and then sell the home for $105,000, you would report the sale of the home on your tax return on the capital gain/stock sale screen with a sales price of $105,000 and a cost basis of $100,000 for a taxable gain of $5,000.
Your cost basis in the house will usually be the fair market value of the house on the date of death. For example, if the house had a value of $100,000 on the day your loved one passed away, then your cost basis in the house is $100,000. If you hold the house for a few months and then sell the home for $105,000, you would report the sale of the home on your tax return on the capital gain/stock sale screen with a sales price of $105,000 and a cost basis of $100,000 for a taxable gain of $5,000.
