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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29650
Experience:  Taxes, Immigration, Labor Relations
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If I sell a second home for a loss, can I claim that loss as

Resolved Question:

If I sell a second home for a loss, can I claim that loss as a deduction on my income tax return? It use to be my main home, but I moved out of it 2.5 years before it sold and I did not live in it during those 2.5 years. It was not a business property and it was not a rental property.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.
Hi and welcome to Just Answer!
Unfortunately for your situation - the loss realized from the sale of the personal property may not be used to offset other taxable income.
Generally, property held for personal use is a capital asset. Gain from a sale or exchange of that property is a capital gain. Loss from the sale or exchange of that property is not deductible. You can deduct a loss relating to personal-use property only if it results from a casualty or theft.

Let me know if you need any help.
Customer: replied 5 years ago.
If I had made the house a rental property during that time period and it had been rented, would I be able to claim the loss as a deduction?
Expert:  Lev replied 5 years ago.
If you convert a personal property to rental - and later will realize a loss - that loss is fully deductible.
However the basis for determine the loss will be the lesser of your basis and a fair market value of the property at the time of conversion. So - you will not be able to claim as a loss the change of the fair market value before the conversion.
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