Can losses on primary residence be deducted after a relocation?

Question

I bought my house in May of 2005, I then moved in August 2006 to California for a new job and my house has been for rent/for sale ever since. I was never able to rent, now have the house under contract and am doing a short sale on the property. I will be losing 50K on the value and will owe the second mortgage 13K and will be forgiven the remaining 37K through a 1099c. Since I actually lived there less than 2 years, can I deduct my losses on it by saying it was not my primary residence? I will end up having to pay taxes on the 37K as if it were income as well as 10 months of expenses (which I deducted much of on my 2006 taxes)...

Help!

Since i have not lived there in over 10 months though, and lived there for less than 2 years, can I change its status to a rental property or something where the loss could be deductible??

Answer 1

The "primary residence" status of this property is irrelevant. It was a residence, therefore personal property. When you were using it, it was not available for rent. When you had it for sale, only a person interested in buying it would move in and pay rent. So, it was never converted to a rental property.

Your best option is to figure your net worth as of the date of the cancellation of debt. Then, if you have negative net worth, file Form 982 with your 2007 tax return to exclude from income the cancellation of debt up to the amount of your insolvency. Amounts over the excluded cancelled debt will be reported on Line 21 form 1040 as other income and taxed as ordinary income.

You will still deduct any mortgage interest or real estate taxes you paid on this property up to the date of sale.

Answer 2

a million) lease on the hot area isn't deductible because it somewhat is no longer a momentary relocation. 2) activity and property taxes on the previous domicile are already deductible. changing it to a condominium could assist you depreciate the domicile. even regardless of the undeniable fact that, you are able to no longer in straightforward terms call some thing a condominium. you ought to actively be attempting to lease it. A ton of deductions on a condominium without condominium earnings could attraction to a pair interest from the IRS. 3) The "losses" you're accruing each and each month are very own in nature and non-deductible. The long commutes daily are additionally no longer deductible.

Answer 3

Sorry, no. Losses on the sale of a personal residence are NEVER deductible.

And to add insult to injury, the $37k forgiven will likely be taxable income to you. You can side-step that if you were insolvent at the time of the forgiveness. If your total debt was more than your total assets you are considered insolvent. The IRS may require you to prove that, however.

Answer 4

If you changed its status to rental property, only the loss in value AFTER the conversion would be deductible. And since it was never rented, you couldn't call it rental property anyway.

No, sorry, you can't deduct your losses - they're personal losses. Living there less than two years doesn't change that.

Answer 5

Not sure about US taxes. As I understand it, you can claim a capital loss for the time you were earning money from the house but must declare to the ATO [Australian Tax Office] any income that you earned by renting out the house. You might be well served to seek an accountant's advice about the matter. Good luck.

Answer 6

capital loss
http://www.taxbin.com/