Sale of foreign home

[Mushroom-Hopper]

Complicated situation:

Before July 2014 wife and I lived at parents, no home ownership.

In July 2014 I acquired a piece of land.

Wife and I build a house on that patch of land.

She moved in August 2016, I moved in November 2016. 

We moved out in April 2017, relocated to the USA. Sister went and lived in the home rent-free. 

We rented in the USA ever since.

We sold the house May 2019. 

So, how do I correctly file taxes on the money that we made/lost on the sale of the house? 

Can we define this as our main home?

[SusanY1]

In order to exclude any gain on the sale of a home as your main home, you must live there at least 2 years out of the prior 5 years. You also cannot have excluded the sale of another home during that same 2- year period.  

You do not qualify to exclude any gain since you lived in the home less than 2 years.  

If you have a gain to report on the sale of your home, you will enter it into TurboTax as follows:

1. Type the search term Sale of home into the Search tool (magnifying glass).
2. Click on the Jump to link in the search results.
3. Follow the prompts to enter the sale. 

If you had a loss on the sale, you do not need to enter it.

Note, above assumes the home was your main home, but does not qualify for the exclusion.  If the house was a vacation home, second home, or investment property - it is treated differently.  In that case, type the same search term above but click on the link "Go to Sold Second Home" that appears below the Jump to link instead.  In this case, any loss is deductible.  

[Mushroom-Hopper]

I have no gain to report.

Having a vacation home, second home or investment property implies that I must have a main home?

Can I have a vacation home and rent? 

If so, can I deduct the loss? 

[ColeenD3]

When you compare your purchase price to your sale price did you gain or have a loss?

If you had a gain, you can potentially exclude it per the answer above. If you had a loss, it is not deductible.

[Mushroom-Hopper]

I did have a loss, so I don't need to report it.

But per your statement, I cannot consider my home in my old country as my second home as I don't own one in the USA (I rent)? 

Because if I could I could deduct the losses.

[LeonardS]

If your foreign home was not rented or used for income producing purposes then the the sale of the home would consider as the sale of your home.  Losses on the sale of your personal home are not deductible. How you refer to the home "second home" has no impact on the sale.

[Ruslan H]

Hi there,

I have a similar situation - I sold a personal flat in a different country and I have a loss. But currently, I'm renting an apartment in the US. 

Where should I put the sale of `personal flat` in TurboTax then?

[KarenJ2]

You need to enter the sale of your foreign property in your return. The gain is calculated by translating the purchase price using the exchange rate on the date of purchase, the cost of capital improvements using the exchange rate on the date the improvements were made and the exchange rate to USD on the date of the sale. 

If this was your primary residence before moving to the US, you can enter it as your primary home. Enter Sale of Home in the Search box at the top of the screen.  

If this was a second home, you would enter it as a sale of investment.  In the search box enter sold second home and select Jump to 

1. Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2019? screen.
   • If you land on the Here's the info we have for these investment sales screen, select Add More Sales.
2. Answer No to the 1099-B question.
3. On the next screen, select Second Home (choose this also for inherited homes) or Land and answer the questions to finish entering your sale.

There is a secondary calculation if you had a foreign mortgage on the home  you sold.   

The Exchange Rate Gain from paying off a mortgage denominated in a foreign currency is treated as a separate transaction and is calculated by translating the amount of the loan using the exchange rate at the time the loan was originated and the exchange rate at the time the loan was paid off. The resulting “gain” is taxable as “ordinary income”