forfeiture

[bardon719]

Client deposited $25,000 to purchase a new home for investment. Since the deposit was given, the house has decreased in value, due to the Florida market, and real estate taxes being increased.

In view of this fact, client is going to forfeit the $25,000, rather then pay the much inflated price.

Can this be deducted as a business loss of some sort. My guess is no, but I would like some other opinions.

Thanks,

Bardon

[jerome]

If the taxpayer was going to purchase the property strictly for investment, then the loss is deductible. If the taxpayer was going to use the home as a second residence, then the loss is not deductible. You can't deduct a loss on personal use property. That is why it is key that the taxpayer say there was never any intent to use it as a vacation home.