I purchased a lake lot in 2003 for $82,000 and sold this year for $70,000. Can I write off the $12,000 loss?

[maglib]

If you purchased the land as an investment property than yes you can but, if you purchased it for personal use then no you can not, losses on sale of personal property are not deductible.  You would have  to show and prove your investment intention to the IRS if asked. The property is residential, so the IRS may argue that it was your intention to live there and build a home. You could disprove this though.

The interest and taxes should have been deducted annually though if you had purchased it as an investment, so they would not be part of your cost unless you made an affirmative election with your tax return to capitalize these costs. The difference between cost and sales price plus expenses of sale would be treated as a capital loss reported on Schedule D. Unfortunately, if you do not have other capital gains, your maximum annual deduction for capital losses against other income is $3,000.

To enter the 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:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (Jump to full list)
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
6. 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)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. Choose type of investment you sold - select everything else
9. Some basic information:
1. Description –  Usually the address of the property sold
2. Sales Proceeds – Your net proceeds from the sale (usually reported on 1099-S)
3. Date Sold – Date you sold the property (on 1099-S)
10. Tell us how you acquired the property - purchased
11. 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.
12. 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)
13. 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

If you are not able to report this sale under the investment section, you will be able to report it as the sale of a business asset.

To enter this investment property as the sale of a business property in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Business" tab ("Federal Taxes" tab in Premier)
2. Next click on “Business Income and Expense" ("Wages and Income" tab in Premier)
3. Next click on “I’ll choose what I work on” (Jump to full list)
4. Scroll down the screen until to come to the section “Less Common Business Situations” ("Business Items" in Premier)
5. Choose “Sale of Business Property” and select “start’
6. Select "Sale of business or rental property that you haven't already reported"
7. Sale of Business or Rental Property - yes
8. Enter all the information about your Investment Property Sale here
1. Description - address of property
2. Date acquired - original acquisition date
3. Date sold - date of sale (should be on 1099-S)
4. Total sales price - total sales price (should be listed on 1099-S)
5. Cost of property (or tax basis) plus expenses of sales - original cost plus any capital improvements plus expenses of sales
6. 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)
9. What type of property is this? - select appropriate answer related to your investment property here.
10. Installment sales - no if not on installment sale
11. 2 screens that show the summary of what you have entered for your property sale
12. Sale of Other Business Property - Choose yes if any of these situation apply, otherwise choose no.
1. You sold property that cannot be depreciated such as vacant land, mineral rights or inventory
2. You sold business or rental property that you owed for one year or less
3. You sold business or rental property at a loss.
13. Total Gross Proceeds - enter your 1099-S sales information here (this could be the same amount that was reported earlier as sales price)

Hope this was helpful. Good luck completing your return.