reporting capital gains on a 2nd home

[Sunny2024]

where do you account for improvements that have decreased the amount of capital gains for sale of a 2nd home on 1040? It doesn't seem to be a sales expense but perhaps that is how it needs to be considered? Do you just report a "lump" sum and then keep an itemized listing with receipts of the improvements?  Thanks

[DianeW777]

Yes, it would be considered as part of your cost of the second home.  All capital improvements must be added to your original cost determine your actual gain. Likewise you want to have all of your purchase and sales expenses.

This answer assumes the second home was never treated as a rental property and used solely for personal use.

• Where do I enter the sale of a second home?

[Sunny2024]

thank you for your answer but I still am not sure how to enter it on the tax form. I have the deluxe version of Turbotax and it refers to a 1099 B but not a 1099S.  There does not seem to be a way to properly account for the cost basis, capital improvements etc.  What am I missing? thank Marge

[MayaD]

To report the sale of second home:

1. Open your return
2. Go to Federal then Wages and Income.
3. Scroll down to Investment Income
4. Go to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
5. Answer Yes to the question Did you have investment income in 2024?
6. On the following screen click Skip Import 
7. Select Other and Continue
8. Enter the name of the financial institution and continue
9. For type of investment click the drop down arrow and select Second home and enter the information. 

Improvements add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of additions and improvements to the basis of your property.