We sold our second home and took a loss. Do we have to report it?

A second home that you used for personal purposes (i.e., not as a rental property) is a personal asset. As such, loss on the sale of a second home is not tax deductible. However, if you received Form 1099-S, Proceeds from Real Estate Transactions, you should report the transaction on Form 8949 and Schedule D because IRS computers will be looking for your reporting. In column (f) of Form 8949, you should enter adjustment code L to indicate you have the nondeductible loss and enter the amount in column (g), so no gain or loss is shown on the transaction in column (h).