HW "Skip" Weldon <skip5700removethis[at]hotmail.com> wrote:

- quote -

As I recall, the question of "investment" status for
inherited property is governed entirely by "court made" law
(by those "activist judges," I suppose). The cases seem to
indicate that even a nominal amount of personal use will not
taint the investment characteristics of this property SO
LONG AS it can be established that the predominant intent of
the estate or heirs was to sell (or, I suppose, convert it
to other business use) and that such intent has not been
abandoned. Note that this criteria is much different than
the rules regarding personal use under IRC 280A.

However, if the intent to sell HAS been abandoned, then
normal rules would apply to the disposition of a "mixed use"
property.

Here is an example of my first point: Years ago a client's
mother died, leaving her home to client and his sisters. The
siblings quickly agreed that they wanted to sell the house.
However, given the sluggish market at the time, they
permitted a niece to live in it "rent free" (ostensibly to
"keep an eye on the place") while pending sale. It took
almost two years to sell, resulting in a small loss.

The accountant that had handled the mother's returns
suggested that the loss was probably deductible by the
siblings. I was skeptical, but after researching the matter,
agreed.

Note that were it NOT for the inherited status (and related
court-made rules), IRC 280A would have held that rent free
use by a family member was attributed PERSONAL use by the
owners.

MTW

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Christopher Green wrote:
- quote -

But here's the rub. If it's not disused, it's used. If
used by family member(s) it becomes personal use property
and loss not deductible . If rented out it is rental
property and that's another whole different ball game.

Cheer$$$$,
Harlan Lunsford, EA n LA

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- quote -

What if the property was personal use (lived in) for part of
the time, and rented out for part of the time. What then?

-HW "Skip" Weldon
Columbia, SC

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Debra wrote:

- quote -

If never lived in since parents' deaths, then it is
inherited property, and therefore eligible for capital loss
treatment.

Cheer$$$,
Harlan Lunsford, EA n LA

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dkanttila[at]yahoo.com (Debra) wrote:

- quote -

If it is indeed personal-use property, your loss is not
deductible. It would have to qualify as investment property,
for example by being rented out. If it sat there disused,
that isn't investment property so far as I can see.

--
Chris Green

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Debra <dkanttila[at]yahoo.com> wrote:

- quote -

Property that is inherited is generally deemed to be "held
for investment" unless or until it is actually converted to
personal use. So, if there was no personal use on the part
of the siblings, I'd agree with those who say that the loss
is deductible.

An interesting question would be whether personal use by ONE
sibling would taint this situation for the other siblings.
But, fortunately, it sounds like we don't have to resolve
that here.

MTW

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Sold lakehome myself & 4 siblings became owners of after
deaths of parents. We owned it for about 2 years and it
was never lived in following their deaths. When sold, we
took a $10k loss on it ÷ 5 of us = $2000 each. The title
company reported sale to irs, but we never got any kind of
1099, as they said they didn't have to send us any. 2 sibs
tax consultants say can't take loss on it because it's
considered personal use property, but must report it on
schedule D. 2 sibs tax consultants say can take loss on the
sale and use schedule D. Only 4 days to file....I don't
have a tax consultant. Does anyone know if this is an
allowable loss? Help

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