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Category: Tax
Satisfied Customers: 12457
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Can I take a tax deduction on the loss in a foreclosure. I

Customer Question

Can I take a tax deduction on the loss in a foreclosure.
I was foreclosured on in 2010, business property.
Now I am back on my feet and am making payments to pay back the amout of the loss to the lender, which was over $300,000
I am paying $50,000 per year until he has totally recovered his loss.
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
Hi,Yes, ... what you'll need to do is ask thee bank how the interest is being applied ... IRS will only allow the actual interest paid in a tax year, so depending on how the credit the payback, some or all may he interest
Expert:  Lane replied 2 years ago.
Hello? Do you have a way of knowing how much f the payback is repayment of interest?
Expert:  Lane replied 2 years ago.
OK, I still don't see you coming into the chat here ... … I’ll move us to “Question and Answer” mode … (We can still continue our discussion there, just not in real-time chat) … This way you won’t be charged for additional chat time and we can continue the dialogue. Bot***** *****ne, if this was used for business the interest is a deductible business expense ....the task at hand is to document how much of the payback in a given tax year is interest. If you can get something from the lender that either states how much was credited to interest and how much to principal, or even something in writing that says payments are, for example, applied to acccrued interest first (so that you can calculate for yourself) this would be enough documentation to take whatever amount IS interest as a deduction
Expert:  Lane replied 2 years ago.
I’ve moved us to the Q&A mode so JustAnswer won't charge you for more Chat time.
Please let me know if you have ANY other questions at all...