Real estate

Forum|Forum|6 years ago
February 18, 2020
1 reply
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My current wife purchased land in Nevada in 1981 for $8000. 00. We got married in 1987. With financing etc we spend a total of $13,956. After all the years of paying taxes, we finally sold the property for $1327.00.

Can we claim the substantial loss or any of it by using it against our capital gains or however.

Thanks.

LudwigVan_fan

If the property was purchased as an investment, the loss on the sale would be claimed as a capital loss.

However, the loss would be measured by selling price, less the adjusted basis.

You talk about "with financing etc we spend a total of $13,956" The financing cost (interest) would have been deductible in the 1980s and 1990s and is not added to the basis. The same for the real estate taxes. Unless a portion of the RE taxes were for special assessments or improvements to the land.

Based on the numbers in your question, provided the intent of purchasing the property was for investment, the long-term capital loss would be $1,327 less cost of $8,000=($6,673).

Here is a link to IRS Pub 550...investment income and expenses

https://www.irs.gov/pub/irs-pdf/p550.pdf

**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**