Loss in Sale of an investment property doesn't show up in 1040

[Babak]

I'm trying to report a sale of an investment property (never rented out, never lived in it, never depreciated) at loss but whatever I do, the loss doesn't show up in 1040. I'm using Schedule D/4797. They have passive income too. How should I do it so they can deduct a portion of almost $23k loss?

Thanks

[MAW]

If the asset has never been depreciated or used in a business transaction, you should not be using form 4797 and put the adjusted basis and closing cost and the sales price directly on the schedule D.  Also, make sure the gains from other investment income is not absorbing all of the loss.  Hope this helps.

[Babak]

The client has only $10k in capital gain and this sale of house had a loss of $23K. I'm using proconnect and schedule D in proconnect looks like is only used for stock. Sorry that I may sound dumb but this is the first time I'm encountering this.

[sjrcpa]

Schedule D is not only for stock. It is for the sale of any capital asset.

[Babak]

I did put it in Schedule D and it deducted $3000 limit and carried over the rest but got a critical Diagnostics saying I have to "trigger home sale exclusion computations, an entry is required on "sale of home" and when I do that, it removes the capital loss deduction of $3000 and the carry over amount turns Zero. Am I doing something wrong?

[PhoebeRoberts · Accepted solution]

You should not have any entries at all in the Sale of Home section if you have the sale of an investment property, rather than a primary residence. Once you remove all the entries, you won't have a diagnostic saying that your entries are incomplete.

[Babak]

Thank you so much, it worked.