I sold a second home, not my primary residence, for a loss and received a 1099S form. I don't believe the 2020 version of TurboTax addresses this correctly.

[HelenC12]

Generally, property held for personal use is a capital asset. If you're referring to the loss on your personal second home, the loss from the sale or exchange of that property is not deductible.

• You can deduct a loss relating to personal-use property only if it results from a casualty or theft.

To enter that sale of an inherited second home in TurboTax Online: see Where do I enter the sale of a second home, an inherited home, or land on my 2020 taxes?

To enter sale of a second home if you're using the CD\Download version, click on TurboTax CD/Download.

[rjsticinski@gmai]

Hi HelenC12. Unfortunately, I do not believe your response answers my question.  I've checked both Schedule D and Form 8949 and the results show I have a capital loss.  In my case my loss on the sale of the second home is $46,000 so TurboTax treats that that total amount as a capital loss where $3,000 is applied in tax year 2020 and the remainder is carried over.   But I have read in many online postings that you cannot  take a loss on the sale of a home.  In this case this is a second home, not my primary residence, where I never rented it or used it for any business purpose.  The only way I can see to avoid the capital loss is to adjust Form 8949 so that the cost basis amount for the second home matches the sale price listed on my Form 1099S.  I know the cost basis exceeds the sale price on the home so I think TurboTax should be able to account for this rather than me gaming the numbers.  Please advise on what I should do? Thank you. Ron

[JohnB5677]

@HelenC12 is correct.  Per the IRS 2020 Instructions for Schedule D (2020) | Internal Revenue Service (irs.gov) under Capital Assets Held for Personal Use it states:

Loss from the sale or exchange of a capital asset held for personal use isn't deductible. But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, you must report the transaction on Form 8949 even though the loss isn't deductible.

[rjsticinski@gmai]

Hi JohnB5677,

So given that then I need to override TurboTax so it doesn't process the capital loss from the sale of the second home  Do you expect TurboTax to update their application to address this type of transaction? 

Ron

[Hal_Al]

You missed the box where you identify it as personal use property.  Delete the sale from where ever you entered it. Enter instead as home sale.

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Less Common Income

  - Sale of Home

[Zbucklyo]

I think TT does handle it properly.  If you enter it in the investment section (not in the sale of home section).  You indicate the sale was not reported on a 1099-B. TT asks the usual questions - date of sale, date of purchase, sales price, basis, etc.  You will come to a screen:

Select Any Less Common Adjustments That Apply.

Check the Box "Any loss from this sale is not deductible...", and the radio button "This is personal use property".

That should do it.

[rjsticinski@gmai]

Hi @Zbucklyo,

I tried your method and it worked perfectly with one exception. The dialogue says this is for the primary home. In this case this was the sale of a second home.  

Ron

[Hal_Al]

It doesn't matter. All you are trying to do is exclude the capital loss. Mission accomplished.