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How to report the sale of a home for a co-signer, who didn't use the home as primary residence nor rental?

Level 3

Hello All,

Does 2020 tax season get any easier? I have a client who co-signed for a nephew, whom the nephew lived in the home and sold it 2020; the nephews tax preparer wrote it off as main home exclusion; yet a client that was the co-signer is now holding the other 1099-S, for the other half. The problem is how to report the co-signers 50% that was not their main home (he only co-signed). The home sold as a loss. The co-signer who had nothing to do with the home sold; this year will be also selling his primary residence this year, which I cannot use the primary home exclusion for the home sold in 2020. The home sold 2020 was not a primary residence for the client nor was rental. Attempted to enter it on page 1 of 4797 as assets not related to specific property and noticed the loss was not limited to the $3000 but rather applied full loss to wages. Any suggestions how to approach this?

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2 Comments 2
Level 11

It sounds like what you were calling a "Co-Signer" was actually a Co-Owner? If he was truly a co-signer the transaction likely would not have been in his name at all.

4797 is for Business Assets (and Rental's Etc.) not personal use property.

The Transaction should be reported on Schedule D - use the 1099-B input.

I don't believe that any of the loss should be deductible as the property was Personal Use Property.


Level 3

Understood, thank you, makes more sense when brainstorming with others. 

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