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If I sell my house for a loss, what's the tax consequences?
I bought a condo back in 2007, it's now worth about 100K less than it was back then. I've since moved to a new state and will probably sell the condo I own. If I do sell it for 100K less than I bought it for, what are the tax implications? Will I be taking a huge deduction for this and possibly pay no tax for that year (I make a lot less than 100K at my job)
So most answers are assuming that this is a personal residence. As I've moved to a different state, it is now being classified as investment property (I have someone renting it right now). Does this change the answer?
Also, if I can't take a loss, does that mean I wouldn't have to pay gains if I was able to sell it for a profit?
I guess I don't have to pay gains on it as one answerer said. (but what does "most people" mean in that context?)
8 Answers
- Anonymous1 decade agoFavorite Answer
Nice, try, but you still can't take the loss.
As I've moved to a different state, it is now being classified as investment property (I have someone renting it right now). Does this change the answer?
If the loss occured while you were living in it, the loss is NOT deductible.
When you convert a property to rental, you do the depreciation with the LESSER of the cost basis or the appraisal value, so your depreciation on the property is also limited.
When you sell the rental property, you can only claim the loss that occured AFTER you rented it...and then you'd better have paid appraisals to back up your claim.
- Anonymous5 years ago
I'm sure I'll be in a similar situation years from now. I believe that you don't depreciate the land, just the improvements (structure). I'm guessing that you will be taxed at long-term capital gains rate (15%) on the recapture of the depreciation, since you got to take a depreciation deduction at 25%.
- Bostonian In MOLv 71 decade ago
There are none. You cannot claim a capital loss on the sale of a personal residence. This is because the gain on the sale of a personal residence generally is not taxable (at least for most folks).
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- Wayne ZLv 71 decade ago
Losses on personal residences are not deductible at all.
So....there is no tax consequence.
- chatsplasLv 71 decade ago
NONE
a loss on your home or any personal property sold, has no tax consequences
UNLESS you took the first time home buyers credit ($7500)
www.irs.gov sale of home
Source(s): tax pro - MadManLv 71 decade ago
No. Losses on your home are not deductible and so have no bearing on your taxes.
