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Is a loss tax deductible when selling a home?

2019 – 03/27 When a taxpayer sells a personal residence, a loss isn’t tax deductible. A loss is deductible if a property is converted to income-producing purposes before a sale. In one case, a couple claimed a loss deduction on their tax return for a home that they’d allegedly renovated to sell as an income-producing asset. But the U.S. Tax Court disagreed with that claim. The court noted that they hadn’t marketed the home publicly. They’d merely rented it out at less than fair market value to the husband’s fraternity brother before selling it at a loss. (TC Memo 2019-19)


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