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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13565
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am 68 and plan to retire next year. Three years ago my daughter

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I am 68 and plan to retire next year. Three years ago my daughter (with 4yr old granddaughter) graduated from college in
Orlando,Fl. and was having a hard time finding a job. Since I was planning on retiring wherever she was living, I bought a house there where they could live until she got on here feet and when I retired I would move into the house and find something else for her. She has now been offered a good job in West Palm Beach and will be moving there in a few months.
I wold like to sell this home, to buy another in West Palm but the market has dropped even further than when I bought.
If I sell at a loss is that tax deductable? Or would I have to rent it for awhile and then sell to get any deduction. I really need the money to make a down payment on the new place. Would a home equity loan be smart if it does not sell fast.

Robin D :

Hello and thank you for using Just Answer,
Because you did not use the proeprty as your main home but allowed a family member to use the property, it is considered personal use and you would not be allowed to claim any loss for tax purposes if you sold and indeed had a loss.
If you change to rental use you would be allowed to claim a loss for tax purposes. You would alos need to recapture any depreciation. This means that you pay tax on the portion you depreciated while rental use when you sale the property.
Your question about a home equity loan is really out of the tax realm.


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Customer:

If I change to rental, how long do I have to rent it to be able to sell it and claim tax loss? What if I can't find renter or have to rent it at a negative cash flow? Is there any other

Robin D :

You can generally deduct expenses of renting property from your rental income. You begin to depreciate your rental property when you place it in service. You can recover some or all of your original acquisition cost and improvements by using Form 4562 (to report depreciation) beginning in the year your rental property is first placed in service, and beginning in any year you make improvements or add furnishings. So as soon as you place the property as vailable for rent you can begin to use depreciation.
As far as how long does it have to be rental, it is really the intent to rent for profit that is important. The IRS does not set down any specific time but you should be able to file at least one tax return with the rental listed. Even if you rent and sale in the same year.

Robin D :

I am switching to Regular Q & A please bear with me.

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