Originally Posted by Af716
I've been told by a few people that If I sell a property I inherited a couple thousand under the county appraised value before the death, that it will be completely tax free, because it is considered a loss on a long term asset. Is the true?
Whenever the individual dies and passes property onto you, the cost basis of that property then changes. The cost basis will change automatically to the fair market value of that property on the day that the individual died. Your basis in the inherited property is the fair market value the day the previous owner died. For example, say, your father bought his home for $150k, but it was worth $250k on the day he died. The second figure is your basis: If you sell for $200k, you have a $50k loss rather than a $50k gain. Normally you class gains and losses as short term or long term, depending how long you've held the property. With an inherited property, you always class the gain or loss as long term.Unless you converted the house to a rental, you can not claim the loss on your return. no loss can be claimed from the sale of a decedent?s personal residence unless the property has been converted to an income-producing purpose (such as a rental).