@Busdriver wrote:
Is that an appropriate way to handle the carryover?
It is not really the appropriate way to handle the carryover, but it might be your best shot.
However you want to handle this, do not enter the sale in the Sale of Business Property section. Since the property was not used in a business nor was it rental property at the time of the sale, you need to report it as the sale of a second home.
You will not get the Section 121 exclusion since it was not your principal residence, but you should get the benefit of releasing any passive losses that were suspended.
