Even if the house was the decedent's personal residence and it wasn't rented out, the above rule applies.If the estate intends to realize the value of the house through sale: The residence is a capital asset held for investment, and gain or loss is capital gain or loss (which may be deductible).Sale of decedent's residence: If the estate is the legal owner of a decedent's residence and the personal representative sells it in the course of administration, the tax treatment of gain or loss depends on how the estate holds or uses the former residence.To determine whether any gain or loss must be reported by the estate or by the beneficiaries, consult local law to determine the legal owner.While the personal representative may have the legal authority to dispose of the property, title to it might be vested (given a legal interest in the property) in one or more of the beneficiaries.
Or, the representative may need to make proper distributions of the assets to the beneficiaries. During the administration of the estate, the personal representative may find it necessary or desirable to sell all or part of the estate's assets to pay debts and expenses of administration.
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