I recently protected situations where you’d need to pay real property capital gains fees, which prompted a few people to ask me about real property capital losses. The basic question is “If you have to pay fees on capital gains from the sale of property in certain situations, is there also situations in which you can declare real estate deficits as a tax deduction?
“. To answer that question, let’s first look at collateral investments versus real estate. Real Estate Gains vs. Capital Losses: Exactly like Investments? A capital gain on the sale of a home is essentially selling your home for further than you bought it for. A genuine estate capital loss is selling your home for less than what you originally bought it for.
With equity investments (stocks, mutual funds, etc.) you can deduct capital deficits from your taxable income and you also must pay capital gains fees when you make increases on your sale. However, the same rules do not apply to increases and losses on the sale of major or supplementary residences. Are Losses on the Home Sale Tax Deductible? According to the IRS Publication 523, “A loss on the sale of a genuine home is not tax deductible”. Check out page 5 of the publication to get more specifics.
Unfortunately, for anyone who was seeking a sterling silver lining when offering their home for a reduction over the past couple of years, it won’t come by means of a tax deduction. There is an exception. …
