Deducting A Loss On A Home
When you sell your home, you expect a fair price. In a buoyant sellers market there is usually few houses that are up to scratch and competition for these properties can be fierce at times.
Most sellers wouldn't complain if their property became the subject of a bidding war, as one family faced off to the other on some crusade to secure your house as their next home. What sellers do worry about is a buyers market.
Buyer's Market
A buyers market occurs when the housing market is saturated with good quality houses. Although this can occur at any time in the year, it is more likely to occur around the winter months when less people are looking for houses.
If the housing/property market is saturated with good quality houses then buyers will have a good range to pick from and therefore will make a fare or smaller offer to the seller, than the list price. This market price that they offer maybe less than the seller was hoping for, but is not the end of the world.
If, however, the offer by the seller is lower than the price that the buyer originally purchased the property for, for example the housing market was at its peak when they bought the property and has since decreased, and even with inflation the price is not near what they paid for it, then most sellers assume that if they accept the offer they will be able to claim back some of the loss in their taxes. But is this actually true?
The Answer
The simple answer to this question is NO. The Internal Revenue Service does not allow deductions for losses on the sale of your a home. In fact there is absolutely no way to use a loss on the sale of your main property to gain an advantage on your income tax return.
