Sale of House/Investment - Capital Loss Reporting

[ridenbaughn]

We initially bough a house as an investment property but had to sell it in less than one year, which resulted in a loss.  TurboTax won't record the Capital Loss in the Business section (actually removes it when the loss is calculated).  Classifying it as a Second Home does not allow for a loss either.  How do I remedy this?

[DaveF1006]

It depends on how you used or intended to use the property. Assuming you bought the house and then it remained empty, you would record this as an investment sale and would record the sale in this manner.

1. Go to federal
2. Wages and income
3. Investment Income”
4. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’  
5. 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)
6. Since you did not receive a 1099-B, answer “no” to the 1099-B question
7. Choose type of investment you sold - select everything else
8. What type of investment other
9. How did you receive the investment. Indicate you purchased it. 
10. On what did did you receive this investment.  The date of purchase of the vehicle.
11. Some basic information:
    1. Description –  Usually Once he address of the property sold
    2. Sales Proceeds –  The amount you received for the sale
    3. Date Sold – Date you sold the property
    4. Cost or other basis  (This is the price of purchase plus any improvements made) 
12. Complete the remainder of the section.  Once done, you should be able to claim a short term capital loss. 

Capital losses on any type of investment is limited to $3000 per year.  The excess amount will then be carried over each year until the loss is absorbed. 

If you rented out the house during this time, you would need to complete the rental section of your return and then the sale of the house would be reported in this section. Also if you lived in the house at any time during this year, it would be treated like a second residence and capital losses on personal residences are never allowed under any circumstances..  

Sale of a house