i am about to sell my home and the market isn't good. so, if i sell at a loss, do i need to pay tax?if not then can i claim the losses and how much even if i do not convert the primary home (the one i a,m selling) into a rental property prior to the sale? I've heard that one can deduct $3000 from IRS if home is sold at loss but what if it is not converted into rental property before sale??really confused.
2007-09-12 21:47:21 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Loss on sale of personal residence is not deductible on tax return. You have a good idea about turning the house into a rental property, but should probably have it be a rental for around 1 to 2 years before selling it in order to make a good case if the IRS ever decided to audit you.
2007-09-13 01:48:58 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The bank isn't going to allow you to count the rental as income. The "income" is going to be the difference between the rental - the mortgage plus another 25%. You need to research to see if you can even rent it for that much. Furthermore, they will require you to have a 12-month lease in place. They will ask for relocation paperwork from your employer if you are a W-2 employee. You cannot do this if you are self-employed.
2016-05-18 04:00:12 · answer #2 · answered by ? 3 · 0⤊ 0⤋
No loss allowed on personal residence.
The conversion to a rental before the sale would not work either as the basis of the rental would be the lower of the cost or the fair market value on the date of the conversion.
2007-09-13 01:47:10 · answer #3 · answered by Wayne Z 7 · 1⤊ 3⤋
You get NO deduction for a loss on the sale of your principal residence. Sorry!
2007-09-12 22:53:33 · answer #4 · answered by Bostonian In MO 7 · 1⤊ 0⤋
No, you don't get to claim a capital loss on a personal residence.
2007-09-13 18:02:02 · answer #5 · answered by Judy 7 · 0⤊ 1⤋