Tax - House Capital Loss Question? (pay, taxes, income, business)

[AnalyzeThis]

In light of all the Government bail-outs, special programs, recovery/reinvestment acts, etc. does anyone know if there has been tax changes for people who actually sold their home at a loss (i.e. brought cash to closing versus a short sale or foreclosure)? I don't think in the past you received deductions for capital losses on selling your primary residence, while capital gains above a certain amount was taxed.

[molochai2580]

As far as I know there is nothing like that. Don't you know the government doesn't care about the little people?

[sweetana3]

Nothing yet. I would doubt anything anytime since a source of revenue to offset the enormous losses would be required.

[AnalyzeThis]

That's unfortunate. All of the bank bail-outs should've been redirected to the homeowners that tried to do the right thing :-/

Oh well, thanks!

[qdogfball]

Loss
You cannot deduct a loss from the sale of your main home.


Sale of Residence - Real Estate Tax Tips


BUT!

Losses on Investment Properties

There is an exception. If you sell an investment property for a loss, your loss may be deductible against your income. Investment properties are treated very similar to equity investments in this regard. You will need to fill out IRS form 4797 in order to claim your losses.

[cardinal2007]

Capital losses on home are not tax deductible because the government tied that to the capital gains taxes on homes. You don't pay capital gains taxes when you sell your home at a profit, so you can't take a loss on your taxes when you sell a home at a loss basically.