Selling at a Loss......Pro's....please help - Posted by acw

Posted by Jack on July 25, 2007 at 09:29:19:

If it is an investment property, yes. Owner occupied, no.

Selling at a Loss…Pro’s…please help - Posted by acw

Posted by acw on July 25, 2007 at 09:04:25:

If a seller of a home sells for less than what it is appraised for, can the Seller write off the difference as a Loss?

Ex. Seller of 300k home can’t sell. He needs to sell and accepts an offer of 250k. Can he write off 50k?

thanks in advance…

Re: Selling at a Loss…Pro’s…please help - Posted by Sgt.Sausage

Posted by Sgt.Sausage on July 30, 2007 at 08:36:25:

Funny how folks look at this. " … I want to take a writeoff on an imaginary loss …".

Let me ask this simple question: On the way up to $300K from whatever they bought it at – did they pay capital gains taxes? Didn’t think so.

Re: Selling at a Loss…Pro’s…please help - Posted by Rich-CA

Posted by Rich-CA on July 25, 2007 at 20:32:30:

The easiest rule of thumb on losses is: if it sells for less than you PAID for it, its a loss. Otherwise, its not. There are all sorts of tax details that can adjust this, but the rule of thumb is the starting point. So regardless of “appreciation” or “appraisals”, the value is what someone is willing to pay and that would be the amount the last buyer paid until another buyer comes along.

Thanks Guys… - Posted by acw

Posted by acw on July 25, 2007 at 16:41:50:

Thanks all…

Basically, its according to your basis and whether or not its OO or NOO.

Cheers!

correction… - Posted by Jack

Posted by Jack on July 25, 2007 at 14:28:22:

I misread your question. I just presumed that you meant, can a seller of a property write off a Loss ($50,000 less than the purchase price). A question about a loss relative to appraised value makes no sense, hence my confusion.

All Right Answers - Posted by Jimmy

Posted by Jimmy on July 25, 2007 at 12:36:01:

but let me summarize:

  1. if this is the personal residence of the seller, there are no allowable losses. period. its a personal asset. tax losses are not allowed.

  2. if this is an investment property, subtract the adjusted bais of the property from the amount realized in the sale. adjusted basis= (a) acquisition costs, plus (b) capital improvements since acquisition, if any, minus © depreciation allowed or allowable in prior years. No depreciation is permitted in the year of sale. The appraised value, as others quickly pointed out, is irrelevant.

  3. I’m not addressing another possibility. the calclation would be different if this seller was a flipper in the business of turning houses.

Re: Selling at a Loss…Pro’s…please help - Posted by StevenS(CPA)

Posted by StevenS(CPA) on July 25, 2007 at 11:04:31:

Bill, rehabber and Frank are right. Appraisals mean nothing to profit or loss. Don’t even think about it.

Re: Selling at a Loss…Pro’s…please help - Posted by Bill Jacobsen

Posted by Bill Jacobsen on July 25, 2007 at 10:01:36:

The short answer is NO. Now, a longer answer.

If it is owner occupied you do not report gains nor losses.

If it is an investment property you can deduct the difference between Sale proceeds and the basis in the property. The appraised value means nothing.

Bill

Re: Selling at a Loss…Pro’s…please help - Posted by rehabber

Posted by rehabber on July 25, 2007 at 10:00:45:

less than what it is appraised for??

I don’t think that is the criteria to declare
a ‘loss’. i.e. - person buys home for 200k, holds
it a few years, now it gets
appraised for 300k, but person sells home for 250k -
that would be a capital gain of 50k (250-200k)
not a loss just because it appraised higher.

NO … - Posted by Frank Chin

Posted by Frank Chin on July 25, 2007 at 09:58:49:

ACW:

Capital gain or loss for investment property is calculated on the “adjusted basis”, and has nothing to do with appraisal.

It would be ridiculous for the IRS to allowed it based on appraisal.

Example. My dad bought a commercial property for 25K in 1963, and now worth 1,000,000. So does he bribe an appraiser to appraise it for $1,250,000, claims he cannot sell it for $1,250,000 (wonder why), and declare a $250,000 LOSSS??

I took a tax course once, and the professor says certain things has to pass a “smell test”. For my dad to make $975,000 gain and able to declare a $250K loss would really be something. Does not pass the “smell test”.

Frank Chin