Capital Gains and Losses - Sale of Vacation Home

A second home, or a timeshare, used as a vacation home is a personal use capital asset. A gain on the sale is reportable income, but a loss is NOT deductible.

You may receive IRS Form 1099-S Proceeds from Real Estate Transactions for the sale of your vacation home. You would report the transaction on Form 8949 Sales and Other Dispositions of Capital Assets and Schedule D Capital Gains and Losses by entering the data on Form 1099-B Proceeds from Broker and Barter Exchange Transactions in the TaxAct® program.

To enter the sale of your vacation home in TaxAct:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand, click Gain or loss on the sale of investments to expand, then click Capital gain or loss (Form 1099-B).
  3. Click + Add Form 1099-B to create a new copy of the form or click Edit to review a form already created.
  4. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.

Loss on Sale of Vacation Home

If the result of the sale of your vacation home is a loss, then you will need to adjust the basis so no loss is reported. On the screen titled Investment Sales - Adjustment Code(s), select "L - Other Non-Deductible Loss (including Personal Loss)" from the Other adjustment code drop-down, and enter the adjustment amount equal to the loss.

Second Home Held for Investment

If the second home was held for investment purposes, a loss on the sale would be deductible, so an adjustment would not be necessary. The sale of a second home held for investment can be entered using the steps above.

Second Home Rented

If the second home was used for rental purposes, or if you previously claimed depreciation on the property, the sale would be reported on IRS Form 4797 Sales of Business Property. The sale of a second home used for rental purposes would be entered in the TaxAct program within the applicable section of the Q&A (Schedule C, Schedule E, or Schedule F). See IRS Publication 527 Residential Rental Property for additional information.

Additional Information

See IRS Publication 544 Sales and Other Dispositions of Assets (Including Rental of Vacation Homes) for more information regarding the sale of vacation homes.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.