It depends.
No - If you considered this your second home, then this will be considered a personal use property and you will not be able to claim a capital loss on a personal use property.
Yes - If this property was bought to be used as a rental but was never rented, then you would be able to claim this as the sale of business property and claim the capital loss.
Click this link for further information about reporting
the sale of a capital asset
To enter this as the
sale of a business property in TurboTax Online or Desktop, please
follow these steps:
- Once you are in your tax
return, click on the “Business" tab ("Federal Taxes" tab in
Premier)
- Next click on “Business
Income and Expense" ("Wages and Income" tab in Premier)
- Next click on “I’ll choose
what I work on” (Jump to full list)
- Scroll down the screen until
to come to the section “Less Common Business Situations” ("Business
Items" in Premier)
- Choose “Sale of Business
Property” and select “start’
- Select "Sale of business
or rental property that you haven't already reported"
- Sale of Business or Rental
Property - yes
- Enter all the information
about your Rental Property Sale here
- Description -
address of property
- Date acquired - original
acquisition date
- Date sold - date of sale
(should be on 1099-S)
- Total sales price - total
sales price (should be listed on 1099-S)
- Cost of property (or tax
basis) plus expenses of sales - original cost plus any capital
improvements plus expenses of sales
- Depreciation taken on this
property - total depreciation taken property when rental (Please note the
IRS will assume that you have taken the correct depreciation on your
rental property while your property was available for rent regardless of
whether you have actually take it or not)
- What type of property is
this? - select - Rental estate that I took depreciation on.
- Installment sales - no if not
on installment sale
- 2 screens that show the
summary of what you have entered for your property sale
- Sale of Other Business
Property - Choose yes if any of these situation apply, otherwise choose
no.
- You sold property
that cannot be depreciated such as vacant land, mineral rights or
inventory
- You sold business or rental
property that you owed for one year or less
- You sold business or rental
property at a loss.
- Total Gross Proceeds - enter
your 1099-S sales information here (this could be the same amount that was
reported earlier as sales price)
To report as investment property -
To enter this as a
capital asset sale in TurboTax, log into your tax return (for TurboTax
Online sign-in, click Here) 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 transaction in TurboTax Online or Desktop, please follow these
steps:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Wages &
Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose
what I work on” (Jump to full list)
- Scroll down the screen until
to come to the section “Investment Income”
- Choose “Stocks, Mutual Funds,
Bonds, Other” and select “start’ (or “update” is you have already worked
on this section)
- The first screen will ask if
you sold any investments during the current tax year (This includes any
asset held as an investment property so answer “yes” to this question)
- Since you did not receive a
1099-B, answer “no” to the 1099-B question
- Choose type of investment you
sold - select everything else
- Some basic information:
- Description –
Usually the address of the property sold
- Sales Proceeds – Your net
proceeds from the sale (usually reported on 1099-S)
- Date Sold – Date you sold
the property (on 1099-S)
- Tell us how you acquired the
property - purchased
- Enter the your cost basis-
cost plus capital improvements less any depreciation deducted or allowable
as a deduction less any casualty losses take on the property.
- Date acquired (Just
remember that the date acquired should be more than a year before the
date sold in order for the sale to get long term capital gains treatment
and the lower capital gains rate)
- If you had a loss, on the
question of "Did you use this property for business or
investment?" If the property was not used for any personal use,
you will answer that this was for investment. Otherwise, you will not be
able to deduct the capital loss of a personal use capital asset.
Click these links
for further information about reporting
the sale of a capital asset or Capital Gains and Losses
