Real Estate deposit tax deductible?
Randy Yen-pang Chou
home that will not close escrow until 8 months later, but we
later decide not to buy the house, is the lost deposit tax
deductible? Would this be considered an investment loss? If
so, which tax rule/form would this fall under?
Thanks much.
--
Randy
<< -------------------------------------------------- >>
<< The Charter and the Guidelines for Posting to this >>
<< newsgroup are at www.Misc-Taxes-Moderated.com >>
<< -------------------------------------------------- >>
David Woods EA MST
> home that will not close escrow until 8 months later, but we
> later decide not to buy the house, is the lost deposit tax
> deductible? Would this be considered an investment loss? If
> so, which tax rule/form would this fall under?
My take is that this would be deductible ONLY if you
planned on owning the home as some sort of rental or
investment property. If you planned on buying as a primary
or vacation home then it would be personal property and
losses on personal property are nondeductible.
David M. Woods, EA, MST, ChFC
(617) 723-2422
Boston, MA
www.rytercpa.com
dwo...@rytercpa.com
This advice does not constitute a client relationship.
If you are not a client, you are on your own.
Helen P. OPlanick EA
> home that will not close escrow until 8 months later, but we
> later decide not to buy the house, is the lost deposit tax
> deductible?
No, this is a personal loss and not deductible.
Helen, EA in PA
Director, NAEA; Member of The Tax Gang
President, PA Society of Enrolled Agents
1040EZ and 1040A tax prep at www.1040.com/1040pro
D. Stussy
> If my wife and I place a deposit of $12k to purchase a new
> home that will not close escrow until 8 months later, but we
> later decide not to buy the house, is the lost deposit tax
> deductible? Would this be considered an investment loss? If
> so, which tax rule/form would this fall under?
This is a non-deductible, personal loss.
John A Devine E.A.
> If my wife and I place a deposit of $12k to purchase a new
> home that will not close escrow until 8 months later, but we
> later decide not to buy the house, is the lost deposit tax
> deductible? Would this be considered an investment loss? If
> so, which tax rule/form would this fall under?
No one wants to answer this one , the information needed to
correctly answer is in your purchase contract.
Is this a option to Buy ?
The original intended use of this property will make all the
difference in the deductabilty of this ;(option ) the code
section that covers this is Sec.1234: the easy one to
remember.
You must first define the type of assest that you are
intending to purchase and it's intended usage, if it is for
personal use, as in a residence you intend to live in; you
will probably not get any deduction ,but if it was a
residence you intended to buy and rent or resale , yes you
have a deduction .
Read this section very carefully if you are preparing your
own taxes ,several other code sections may apply depending
on the type of property and whether this payment may be
treated as a (option), or something else depending on the
wording of your purchade agreement .
You should get a second opinion from a paid Pro Perparer on
this contract wording and intended usage is everything ;if
you are seeking a nailed down deduction .
Tax Wizard E.A.