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Lev
Lev, Tax Advisor
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I have an IRA (148,000.00 ) I also have

Resolved Question:

I have an IRA (148,000.00 )

I also have an investment property (not my personal residence) (250,000.00 , possibly, todays value)

If I sell the property for my listing price I will have a loss of 112,000.00

If I take 100K from my IRA, can I claim that against my loss to avoid paying taxes on the 100K?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
If you take a distribution $100K from your IRA - that will be your taxable income (assuming all your IRA contributions were deducted from your taxable income). You will receive reporting form 1099R - which will report your total distribution and taxable amount - these amounts will be reported on form 1040 lines 15a and 15b.
The loss on the investment property that was not used for producing income (business, rental, etc) - will be classified as capital loss. It will be fully used to offset your other capital gains. However if you have NET capital loss - only up to $3000 may be used to offset other types of taxable income. The capital loss will be reported on form 1040 line 13 - http://www.irs.gov/pub/irs-pdf/f1040.pdf
Disallowed portion of the capital loss will be carried over to following years.
Thus - if you will realize $112K net capital loss and will not have other capital gains - only $3000 may be used to offset your other taxable income including taxable income resulted from IRA distribution. So far - you will not be able fully offset your IRA distribution.
Sorry if you expected differently.

LEV :

Please be sure to ask for clarification if needed.

Customer:

k

Customer:

Clarification Does it make a difference if the property involved was a rental property?

Customer:

Do I have anyone answering my "clarification" question?

LEV :

Yes – that will be treated differently – the loss on a rental property will be reported on form 1040 line 14 and will be fully deductible against other taxable income.

LEV :

Sorry for delay - the question was locked and I was not able to post.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23239
Experience: Taxes, Immigration, Labor Relations
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