Janitor Bob Posted March 28, 2014 Report Share Posted March 28, 2014 client owns a home, but moved in with new husband many years ago. She kept the home and let her mother live in it rent-free until her mother passed away in 2012. In 2013, she sold the home.....Sold for $60,000.00 cost/basis was $80,000. Her attorney told her she could deduct the max $3,000.00 of the loss. Am I missing something? It was not an "official" rental property...I know because I have done her taxes for many years and never included rental income and expenses. I'm thinking no deduction for the loss. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted March 28, 2014 Report Share Posted March 28, 2014 no loss, it was her 2nd home. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 28, 2014 Report Share Posted March 28, 2014 The attorney is categorazing it as investment (passive) property. That was wrong. michaelmars got it right. Was she deducting Mortgage interest on Sch A? Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted March 28, 2014 Author Report Share Posted March 28, 2014 There has not been a mortgage on this house for many years, but if there had been, I'm sure I would have deducted it on on her Sch A as second home Quote Link to comment Share on other sites More sharing options...
jshtax Posted March 28, 2014 Report Share Posted March 28, 2014 Question: How do you report the sale of a second residence? Answer: Your second home (such as a vacation home) is considered a personal capital asset. Use Schedule D (Form 1040) (PDF), Capital Gains and Losses, and Form 8949 (PDF), Sales and Other Dispositions of Capital Assets, to report sales, exchanges, and other dispositions of capital assets. You get a loss. Quote Link to comment Share on other sites More sharing options...
jshtax Posted March 28, 2014 Report Share Posted March 28, 2014 Now if it had been rental there could be an ordinary loss of the entire amount. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 28, 2014 Report Share Posted March 28, 2014 Where do you report the sale of your primary home? The character of the asset is the one that dictates if the loss is allowed, not the form, correct? I will admit that this is interesting and let's sort it out. Is the attorney correct and she will have loss for 7 years? Quote Link to comment Share on other sites More sharing options...
David1980 Posted March 28, 2014 Report Share Posted March 28, 2014 Question: How do you report the sale of a second residence? Answer: Your second home (such as a vacation home) is considered a personal capital asset. Use Schedule D (Form 1040) (PDF), Capital Gains and Losses, and Form 8949 (PDF), Sales and Other Dispositions of Capital Assets, to report sales, exchanges, and other dispositions of capital assets. You get a loss. That is where it would be reported, but how much of a loss can you claim on a personal use capital asset? Whatever loss you calculate on the 8949 you would adjust to $0 with adjustment code L. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted March 28, 2014 Author Report Share Posted March 28, 2014 That is what I was thinking, David1980...Thanks for pointing me to the specific instructions. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted March 28, 2014 Report Share Posted March 28, 2014 Another personal loss and no deduction. No need to report unless they received a 1099-S. 1 Quote Link to comment Share on other sites More sharing options...
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