Hello again 777,
Thank you for the clarification.
Basically you received this property as an inheritance from your mother. What that means is that you automatically get a stepped up basis in the property. Your new basis in the property is whatever the fair market value was on the day your mother passed away.
When you then sell the home, you would be liable for tax on any gain you had from the sale. Your gain is calculated by taking the selling price less your basis.
With home market values being depressed right now, it is very possible that the market value of this home was actually higher last year when your mother passed away, in which case you may have no gain at all. However, if you do have a gain, it is taxed as a long term capital gain and taxed at a maximum rate of 15%.
The sale of this property would be reported on Schedule D in Part II for long term capital gains/losses.
If you actually end up with a loss on the sale of the property, you may not claim a deduction
for the loss on any personal property. However, if this house has been vacant since your mother passed away, and was not used by your family as a personal residence, then it would qualify to be treated as investment property. In that case, if you have a loss on the sale, you may claim a deduction for that loss on your tax return, not to exceed a maximum loss of $3,000 in any one year. If your capital loss exceeds $3,000, any remaining loss can be carried forward and used on future years tax returns
, claiming a maximum capital loss each year of $3,000 until the entire loss has been claimed.
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Thank you 777.