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Unfortunately losses from selling a personal property, including main house are not deductible. You can only deduct loss from sale of business or investment property.
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The cost of improvements can be used to reduce capital gains but not to increase capital losses. You can deduct the cost of improvements but you cannot claim the loss.
Here's how you calculate your capital gain or loss:
- purchase price
- expenses of sale
= capital gain or capital loss.
You have to claim capital gain but you are not allowed to claim capital loss if you sold a personal property.