Our son and his family have been living in a townhouse my husband and I have owned since 2007. They bought a home this year and moved, so we sold the townhouse. It was never a rental property, and we never took any type of depreciation or expenses on it. When I file our taxes this year how do I classify the property since it wasn't a rental. Do I classify it as the sale of a "second home"? Also where can I find a list of items that I can deduct from the sale price of the townhouse to help offset capital gains?
Since it was never a rental property, just list as the sale of a property. Hopefully, you did deduct the real estate taxes and mortgage interest (if any) on your Schedule A, Itemized Deductions.
For a list of items that can be used as expenses in the sale of a second home (non-rental) go here:
https://www.nolo.com/legal-encyclopedia/when-home-sellers-can-reduce-capital-gains-tax-using-expenses-sale.html
Hello Sheetss! Thanks for participating in our event today. Excellent question. Yes, this would be considered sale of a second home. Most likely you will pay capital gains tax on the proceeds from the sale. This could be 0, 15, 0r 20% depending on your tax bracket. Then only exception would be if you had lived in the home for 2 of the past 5 years. I'm not sure how long your son has been there, but if for example, he had been there 3 years and you lived in it the previous 2, as of the date of sale, then you could probably qualify to exclude the gain. As far as reducing/limiting the gain, there are many potential expenses you could deduct to calculate the actual amount of gain realized. These could be advertising, appraisals, attorney fees, document fees, closing fees, notary fees, points paid by the seller, real estate broker's commission, recording fees, title search fees, transfer or stamp taxes etc. Entering your home sale in Turbotax should be simple. Best of luck. Here are the steps:
The sale of a second home is entered in the Investment section. You will need the Premier edition to report the sale. To enter an investment sale other than from a brokerage account (1099-B), follow the steps below.
Or enter investment sales in the Search box located in the upper right of the program screen. Click on Jump to investment sales
On the next screen, click Yes
On the next screen, click No
On the next screen, choose Second Home and continue with the section until it completes.