Submitted By: Martin
Answered: May 17, 2016 10:59 am

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).

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Tax Glossary

Capital expenses

Costs that are not currently deductible and that are added to the basis of property. A capital expense generally increases the value of property. When added to depreciable property, the cost is deductible over the life of the asset.

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