All closing costs that you were unable to claim while you owned the property (such as loan origination and processing fees) will be added to the basis (original cost) and reduce your taxable capital gain.
How to handle the sale of an investment house:
To
enter this transaction in TurboTax, log into your tax return (for
TurboTax Online sign-in, click Here
) and click on "Take me to my return") and type "investment
income (gains and losses)" in the search bar then select "jump to
investment income (gains and losses)". TurboTax will guide you in entering
this information (see step 6 below)
Alternatively,
to enter this sale in TurboTax Online or Desktop, please
follow these steps:
1.
Once you
are in your tax return, click on the “Federal Taxes” tab ("Personal"
tab in TurboTax Home & Business)
2.
Next click
on “Wages & Income” ("Personal Income" in TurboTax
Home & Business)
3.
Next click
on “I’ll choose what I work on” (jump to full list)
4.
Scroll down
the screen until to come to the section “Investment Income”
5.
Choose
“Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you
have already worked on this section)
6.
The first
screen will ask if you sold any investments during the current tax year (This
includes any sale of real property held as an investment property so answer
“yes” to this question)
7.
Since you
did not receive a 1099-B, answer “no” to the 1099-B question
8.
Choose type
of investment you sold - select Second Home
Some basic
information:
1.
Description
– Usually the address of the property sold
2.
Sales
Proceeds – Net proceeds from the sale (select box to input selling
expenses not reported on 1099-S)
3.
Date Sold –
Date you sold the property
10.
Tell us how
you acquired the property - purchased
11.
Any
business or rental use? - select personal use only (please note that capital
losses are not allowed on personal use property) If you make another selection,
you may need to report this sale under sale of business
Some Basis
information
1.
Date
Acquired
2.
Original
cost basis
3.
Cost of
improvements
