hi everyone-hope you're hanging in there! question-taxpayer moved from their principle residence (house A) in 2004 as they inherited a house. After they moved into their new house ( house B) they renovated house A and put it up for sale in 2005. the house has not sold. They have to sell it by June 2007 in order to keep the section 121 exclusion. I'm thinking they can deduct the cost of maintaining the house, insurance, utilities etc as investment expenses -miscellaneous itemized deductions subject to the 2% since the house is now investment property. Am i correct on this?
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No it isn't
>>the house is now investment property<<
No it isn't. It is personal-use property that they are selling as a primary residence. The Schedule A deduction for "investment" expenses only concerns the production or collection of income.
And by the way, if it hasn't sold in more than a year they are obviously pricing it too high, so don't let them claim a capital loss based on the bogus value that they wanted instead of what the market actually offered.
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