I’m not an accountant but I have had a question asked of me a few times lately as a REALTOR and so I want to address it on my blog. The question -
“Can I write off any loss that I take on my house on my taxes?”
This is otherwise known as “upside down” (hence the photo). For example, you bought your house for $300,000 and have to sell it for $250,000 because that is what the market will bear. Can you write off the $50,000 as a loss on your taxes?
The answer is No.
Of course, there are always caveats (for instance, if this home was used a rental property). I recommend the use of an accountant to help you in those situations.
The good news? Your profit isn’t taxed either in most cases.
There are a few stipulations with this one too (you have to have owned the home for at least two years AND used it as your primary residence for 2 of the past 5 years if it was owned for more) and the amounts are limited ($250,000 for single filers & $500,000 for joint).
I always recommend talking with a tax professional about your particular situation but I do hope this helps answer the black & white question for you. And don’t forget to call me when you’re ready to sell your home!
Source of info: IRS Website