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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53710
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I an selling my vacation home at a loss. This is not a short

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I an selling my vacation home at a loss. This is not a short sale, but a normal sale-I am in good standing with my mortgage holder. However, I am selling it for less than I paid. Can I deduct this loss and the cost of any major repairs that I have made to it?
Hi! My name is XXXXX XXXXX I look forward to helping you!

Some taxpayers in this situation take the position this is "investment property" and thus a loss on sale would be considered a capital loss from the sale of investment property. Treating it as investment property would allow a deduction of the loss to offset any capital gains for the year and then up to $3,000 of other income. Any unused portion could then be carried over to future years. But, this would be a very aggressive approach given the case of Moore v. Comm., T.C. Memo. 2007-134 (2007). In that case, the Tax Court ruled that holding property solely for appreciation wasn't sufficient to support a classification as investment property. So, if the IRS were to challenge your position on the loss, you could expect them to contest your classification of this as investment property.

This is the part of my job I don't like...when the law is not in favor of my customer. I wish I could tell you that you could simply deduct the loss, but, I can only provide you information based on the law so that you can act on the best available information to you. ………..I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). I thank you in advance for taking the time to provide me a positive rating!
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Thank you so much for the positive rating! I truly appreciate you taking the time to do that!

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