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wittsnext
New Member

How to I include buying a cottage and selling another cottage in 2 differant years?

We bought a new cottage on 9/20/2016 for $147,500. We sold our other cottage on 10/21/2016 for 119,000. We had purchased it on 10/29/1994 for 53,000. What forms do we need to fill out
1 Best answer

Accepted Solutions
MargaretL
Employee Tax Expert

How to I include buying a cottage and selling another cottage in 2 differant years?

It depends if the cottage is your main home or 2nd home (vacation home). The IRS is not really concerned about the purchase, so you would enter any deductions for the purchase as usual. Although the purchase of your new home (1st or 2nd home) is never reported on your tax return, you can still deduct home mortgage interest, real estate taxes, Primary Mortgage Insurance, and Points paid on your purchased home. You should be receiving Form 1098 and, if not all items paid are listed, you may look at your HUD-1 statement. You may also be receiving Form 1098 for your original house (the one you sold) and you can deduct the above items as well.

Home deductions (for main and 2nd home) data entry is located in:

  1. Federal Taxes
  2. Deductions and Credits
  3. Your Home

The sale of your main home is reported only if you have a taxable gain or received Form 1099-S. If you lived and owned your home for at least two years in the 5 year period on the date of sale - you don't have to report the on your tax return- if your gain is less than $250,000 if filing Single (and $500,000 for married filing jointly both spouses must live and own the home for 2 years).

If your gain is larger than the amounts above (or received 1099-S) you must report the sale

  1. Wages and Income
  2. Select Less Common Income
  3. Select Sale of Home

The sale of your second home (meaning your cottage is not your primary residence, but a vacation home, for example) is reported as follows:

  1. Federal Taxes 
  2. Wages and Income 
  3. Scroll down to Investment Income
  4. Select Stocks, Mutual Funds, bonds, Other
  5. Indicate that 1099-B/brokerage statement was not received for the sale, continue through the interview.
  6. On the screen Choose the type of investment you sold, select Second Home - you will be asked to enter the net proceeds, the date of sale, how you acquired the property and then the cost basis of the home (original cost and improvements).

View solution in original post

1 Reply
MargaretL
Employee Tax Expert

How to I include buying a cottage and selling another cottage in 2 differant years?

It depends if the cottage is your main home or 2nd home (vacation home). The IRS is not really concerned about the purchase, so you would enter any deductions for the purchase as usual. Although the purchase of your new home (1st or 2nd home) is never reported on your tax return, you can still deduct home mortgage interest, real estate taxes, Primary Mortgage Insurance, and Points paid on your purchased home. You should be receiving Form 1098 and, if not all items paid are listed, you may look at your HUD-1 statement. You may also be receiving Form 1098 for your original house (the one you sold) and you can deduct the above items as well.

Home deductions (for main and 2nd home) data entry is located in:

  1. Federal Taxes
  2. Deductions and Credits
  3. Your Home

The sale of your main home is reported only if you have a taxable gain or received Form 1099-S. If you lived and owned your home for at least two years in the 5 year period on the date of sale - you don't have to report the on your tax return- if your gain is less than $250,000 if filing Single (and $500,000 for married filing jointly both spouses must live and own the home for 2 years).

If your gain is larger than the amounts above (or received 1099-S) you must report the sale

  1. Wages and Income
  2. Select Less Common Income
  3. Select Sale of Home

The sale of your second home (meaning your cottage is not your primary residence, but a vacation home, for example) is reported as follows:

  1. Federal Taxes 
  2. Wages and Income 
  3. Scroll down to Investment Income
  4. Select Stocks, Mutual Funds, bonds, Other
  5. Indicate that 1099-B/brokerage statement was not received for the sale, continue through the interview.
  6. On the screen Choose the type of investment you sold, select Second Home - you will be asked to enter the net proceeds, the date of sale, how you acquired the property and then the cost basis of the home (original cost and improvements).

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