My daughter and I purchased a home in 2011 and we used $25,000 of my money for the down payment and closing costs (they could not qualify for a loan without my name being on the loan). She and her husband lived in the home until 2014 when they moved out of state (I never occupied the house). We attempted to sell the house (listed with a Realtor) but were unable to sell. Finally rented it out and treated it as a rental property for tax purposes. In June 2017 the tenants vacated the house and we again placed it on the market. Finally closed in March 2018. At closing, my $25,000 was returned to me and the remaining proceeds went to my daughter. Form 1099-S issued in each of our names for the total proceeds ($72,500). Must I claim the $25,000 as a long term capital gain even though I did not make any money, or handle it as an investment with no gain? My daughter will use $47,500 (less selling expenses) as a gain.
