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1. Purchased Property for 99K. 2. Made improvements

1....
1. Purchased Property for 99K.

2. Made improvements worth 26K.

3. Sold for 105K, with total expenses (mortgage payoff etc,) for 61k.

4. Net Proceeds from sale: 44K

5. The Property in question was until last year used as the Primary Residence.


I sold the property for a loss. How is the Net Proceeds considered in this Scenario?
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Answered in 4 minutes by:
6/27/2013
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 56,017
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Your taxable gain or loss would be based upon the sale price less your basis in the property. Your basis is your purchase price plus improvements. So, as you reference, you have a loss of $105,000 less $125,000 = $20,000 loss. The IRS does not allow you to deduct a loss on the sale of a primary residence, but there would be no tax impact on your net proceeds of $44,000. That would be simply a return of your investment and not subject to any tax.



I wish I could tell you the loss was deductible, 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!



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Richard
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