decrease in value on inherited property - deductible ?

I'm not a tax professor, but I think a 1/3 interest in a personl residence cannot produce a tax deductible loss. I would also be suspect of a Jly 2007 apreisal

If, by "another tax forum", you are referring to the "funny farm", we all know its value.

The loss on a personal residence is obviously not deductible. But this was an inheritance and it is similar to the loss on securities.

The 2007 appraisal was not within six months of death. Thus, it would not be unreasonable for it to be tossed out upon audit. OTOH home values have decreased sharply over the last two years. It should not be difficult to get written opinions of other appraisers as to the Nov. 2007 value.

Once again we have an example of how expensive tax planning after-the-fact can be.

Dick

text -

I should think almost 2 years with a relative living in it free should pretty well establish it as a personal residence rather than rental or investment.

ed

The other two have a loss if they can produce evidence that the FMV at the time of death was more than the sale price. A smidgen of tax planning could have made a difference for all involved.

But my question is "How long does someone living in a property have to move out before they lose the deduction for loss on sale?"

Dick

Personal use includes allowing a related party to use the property at below-market rent. All the sibs, therefore, made personal use of the home. None of the sibs can deduct a loss.

Technically true, but as it's 7 months after death, a 1 month difference, I think the IRS would be hard pressed to find a reason to ignore it completely should the matter go to the Tax Court. It's more likely that they would find the ENTIRE loss as personal and disallow it from all three beneficiaries. Remember that personal use by a family member can be considered personal use by one's self. They are related people per IRC

It can be expensive before the fact too. ;-)

They should have rented it to her/him at FMV.

Dick