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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12022
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I had a piece of land that I bought as an ivestment. I was

Customer Question

I had a piece of land that I bought as an ivestment. I was unable to sell so I deeded it over to the HOA for no cost because I COULD NOT AFFORD TO CONTINUE TO PAY THE ASSOCIATION DUES. CAN I DEDUCT THE LOSS?
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

Hi,

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It would have been cleaner if you had sold for $1

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That would have been a capital loss - flows frm schedule D to your 1040 to be used against capital gains and then against ordinary income up to 3000 and then carried forward and treated that way (offsets ALL capital gains and then against other income up to 3000) year after year until used up.

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Deeding it over to them for NOTHING is really a gift, not an exchange.

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Let me check the regs and court cases on this - In the mean time... do you have the ability to treat this as a sale to them?

Expert:  Lane replied 1 year ago.

Now, if the HOA treats this as a deed in lieu of forclosure (a HOA typically has the ability to foreclose on its assessment lien), then IRS DOES treat that as a sale.

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They'll give you a 1099-A which you'll use to report the sale.

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And capital gain (or loss) = Sales price MINUS your basis in the property

Expert:  Lane replied 1 year ago.

Let me know if you have questions

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Lane