Hi,
Your second residence (such as a vacation home) is considered a capital asset. Use Schedule D (Form 1040), Capital Gains and Losses and Form 8949, Sales and Other Dispositions of Capital Assets to report sales, exchanges, and other dispositions of capital assets.
Each of the three owners will need to report the gain in their ownership share. The sale price is what you sold your proportionate share of the property for. The cost is your proportionate share of the construction costs and any improvements made. Mortgage will not enter in the gain or loss on the property, as it was a vacation rental.
Mel
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