You never rented it, so as far as the IRS is concerned, it never became rental property. Besides, you have no rental income from which to deduct rental expenses. Remember, passive expenses can only be deducted from passive income. You have no passive rental income.
So you'll just report it as the sale of a 2nd home. You can't claim any of the expenses such as HOA fees and the such unfortunately. You'll report the sale of this property in TurboTax under the Personal Income tab in the Investment Income section. Select "Stocks, Mutual Funds, Bonds, Other" and go from there. Unfortunately, while you may still need to report the sale, the loss won't be allowed if sold at a loss.
Note that depending on the work you did to fix it up, some of that expense may qualify as a property improvement, which adds to your cost basis. Here's the IRS definition of a property improvement, converted to plain English.
Property Improvement
Property improvements
are expenses you incur that add value to the property. Property
improvements can be done at any time after your initial purchase of the
property. It does not matter if it was your residence or a rental at the time
of the improvement. It still adds value to the property.
To be classified as a
property improvement, two criteria must be met:
1) The improvement
must become "a material part of" the property. For example,
remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet.
Replacing that old Central Air unit.
2) The improvement
must add "real" value to the property. In other words, when the property is appraised by a qualified,
certified, licensed property appraiser, he will appraise it at a higher value,
than he would have without the improvements.
Additional clarifications: Painting a room does not qualify as a
property improvement. While the paint does become “a material part of” the
property, from the perspective of a property appraiser, it doesn’t add “real
value” to the property.
However, when you do
something like convert the garage into a 3rd bedroom for example,
making a 2 bedroom house into a 3
bedroom house adds “real value”. Of course, when you convert the garage to a
bedroom, you’re going to paint it. But you will include the cost of painting as
a part of the property improvement – not an expense separate from it.
