Investment sold "Second Home" or "Everything else"

[tomlamson]

I sold a second home in 2019. For "Choose the type of investment you sold" I selected "Second home" and entered the sale and cost information. After I entered the details TurboTax canceled the entry (I don't remember the reason) and said that I should choose "Everything else" as the sold investment type. I did that and re-entered all of the details. I saw that my tax was lower after entering the costs than it was when I chose "Second home." I ended up with a long term loss = -$5000. 

Why did TurboTax cancel my "Second home" entry and recommend using "Everything else?"

Which type should I use?

[Anonymous_ · Accepted solution]

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@tomlamson wrote:

Why did TurboTax cancel my "Second home" entry and recommend using "Everything else?"

Which type should I use?

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Select "second home" if you held the property for personal use (e.g., as a vacation home or secondary personal residence). Select "everything else" if you held the property for investment.

[tomlamson]

Thanks Tagteam,

Do I need to justify that it was an investment to the IRS?

We bought it before the housing crash in 2008 as an investment that we were fixing up.

After the crash we decided to hold onto it, finish fixing it up, and wait for house values to return.

They didn't quite return to a point where we could make a profit, thus the -$5000 loss.

[Anonymous_]

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@tomlamson wrote:

Do I need to justify that it was an investment to the IRS?

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Only if they inquire, but you should not have any kind of significant issue if the house sat vacant and was never used for personal purposes by you or one of your family members.

[tomlamson]

Thanks tagteam!