How to report real estate commissions and legal fees and expenses in federal and state tax returns for sale of your non-primary home.

[Spring5]

In Federal return, I have reported sale of my (non-primary home) in NJ in 2021 as nonresident in “Stocks, Mutual Funds, Bonds, Other” under “Investment Income (1099-B or broker statements)” section. The gross proceeds reflect the sale price of home but does not reflect real estate commissions & legal fees and expenses; should these expenses be reported in “The reported sales price did not deduct all fees or selling expenses?”  I did not receive any tax forms from this sale and have capital loss from this sale. I presume there would be something similar in the NJ-1040-NR form as well?  Thank you in advance for your answer.      

[LeonardS]

You will include the expenses of the sale on the page   Sales of Business or Rental Property   on the  line Cost of Property (or Tax Basis) Plus Expenses of Sale

To enter the sale of your non-primary home follow these steps:

1. Open your TurboTax account
2. Enter Sale of business Property in the search box
3. Click on Jump to sale of business property in the results box
4. Follow the screen prompts to enter you sale information.
5. Continue to the page Sales of Business or rental property to enter your sale expenses

[TomD8]

Q:  "The gross proceeds reflect the sale price of home but does not reflect real estate commissions & legal fees and expenses; should these expenses be reported in “The reported sales price did not deduct all fees or selling expenses?”

A:  Yes.  But report the expenses as described by @LeonardS if you rented out your second home or used it for business purposes.

[Spring5]

Hi Leonard,

Thank you for responding to my question, I appreciate it.

In 2021, I sold my NJ home that used to be my principal residence. Before selling my NJ home, I moved to different state for a job, and ended up buying a home in that state. I was planning to rent out my NJ home, but due to pandemic, I was not able to rent it out and finally decided to sell it last year. Would this be considered an investment property?  I sold this home for less than what I paid for; would this be considered a capital loss?  And I owned this home for more than 15 years.

The 1099-S has just the “Gross proceeds” indicating the sale price. The settlement statement has column with “Debit” for seller with commissions for realtors, legal fees and expenses, out of state tax(2%) to NJ and transfer tax to county recording office. Can I claim all these as sales expenses in “The reported sales price did not deduct all fees or selling expenses” in “Investment Income” in the Federal return?  If not here, where would I claim these sales expenses?  

Thanks again for responding to my question.