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If my home depreciated $50,000.00, due to the economy, is that

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a tax deduction? We live...
If my home depreciated $50,000.00, due to the economy, is that a tax deduction? We live in Phx Az, the housing market here has placed us in an UNDERWATER capacity, is this a tax deductable loss? We paid $150,000.00 in 2008 for the home, it is now valued at 85 to 90k, which is a tremendous loss to us, would this loss be tax deductable or any part of it? Are there any programs available that addresses this situation?
Submitted: 6 years ago.Category: Tax
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Answered in 2 hours by:
5/1/2011
Tax Professional: Lev, Tax Advisor replied 6 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,160
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!
Sorry for your situation...
First of all the loss is only recognized if the property is sold.
If the value of the property is changed, but you keep the property - no gain or loss is recognized.
You will be able to deduct your loss only if that is a business or income producing property - for instance - a rental property.
If that is your personal property - you may not deduct the loss on your tax return.
You might be able to negotiate with the mortgage company to forgive part of your mortgage due to the market change. The amount of debt forgiven is reportable on 1099-C - http://www.irs.gov/pub/irs-pdf/f1099c.pdf - generally is taxable, unless any exemption could be used.The Mortgage Forgiveness Debt Relief Act of 2007 allows for federal tax purposes an exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
Sorry if you expected a different answer.
Let me know if you need any help or clarification.
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Lev
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