How can I claim/deduct losses due to builder defaulted on home construction? Had to pay over $7K on unused approved loan. Plus loss additional $10K trying to settle.

[godad192855]

How can I claim/deduct losses due to builder defaulted on home construction? Fired builder after 6 months (not even land cleared).  Had approved loan, but had to pay over $7K closing cost on unused loan - could not be transferred to another builder. Plus loss additional $11K+ to settle out of court.  Lost more than $19K not including my travel from TX to SC.

[LisaS · Accepted solution]

If this was for a business/rental property you can claim the loss but it may be limited (falls under the casualty loss).  If this is personal then there is no deduction, it is a personal loss.