Have a client who bought a home in a college town for his kids shortly before they were in college. His thoughts on doing this were why pay the tuition at school when he could use that money to buy a house for them. The kids will both graduate this year and he will be selling the house. He has never charged any rent to his children nor has he claimed any deductions other than the property taxes which he pays. He paid cash for the house and did not have a mortgage. He paid $225,000 in 2006 and with the downturn in the housing market he is expecting he may only be able to get around $180,000 which would be a $45,000 loss. Would this loss be a deductible capital loss?
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John Valko -
Peronal loss on a non-investment property is not deductible. It's as if you sold your never rented vacation house. Since 1099-S will probably be issued, should be reported on Sch D with a -0- loss. Of course if sold at a gain, IRS would want a piece of it.Seek wisdom from others who are more wise than you - seek others who you admire and who challenge you. -
d&t is correct
A home purchased for family to use without rent is considered a second home and can not be investment property. Gain is taxable , loss is not deductible.AJ, EAComment
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