Discussion:Is this a capital loss?

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Discussion Forum Index --> Basic Tax Questions --> Is this a capital loss?
Discussion Forum Index --> Tax Questions --> Is this a capital loss?

Www.cpa1.biz (talk|edits) said:

1 October 2008

Almanacers,

A TP leaves Michigan for Virginia. He buys a home in VA. This is now his primary residence. He then sells his old home in MI, which was his primary home before he moved to VA. He did not rent this home.

He sold his house for $130,000 loss. Is this a capital loss?

Beangrinder (talk\|edits) said:	1 October 2008
No loss on personal residence.

Southparkcpa (talk\|edits) said:	2 October 2008
Agreed.

Www.cpa1.biz (talk\|edits) said:	3 October 2008
Okay, what are the rules if they made this a rental property. Is there a holding period for the property to be considered an investment/rental property that could sold at a capital loss.

Kevinh5 (talk\|edits) said:	3 October 2008
basis = lower of cost or FMV at date placed in service

KatieJ (talk\|edits) said:	3 October 2008
Brian, see Reg §1.165-9(b)(2). As Kevin says, the property's basis would be limited to the lesser of original cost or its FMV at the date it was converted to rental property, minus any depreciation allowed or allowable during the rental period. Sorry, you just don't get a deductible loss from the sale of personal use property.

RoyDaleOne (talk\|edits) said:	4 October 2008
How does one, retroactively, convert a house that is sold and rented to rental property? See original post.

Death&Taxes (talk\|edits) said:	4 October 2008
RD1: I can almost see that magic moment as the client sits across the desk and has his loss on his personal residence shot down. "Ah, yes, I forgot to tell you, I put a sign in the window to try to rent it out after I moved out. Doesn't that make it a rental property?"