I bought a second home 10 years ago for 157k and if I sell it before year end 2016 for 85k, still owe 62k on it, can any loss be claimed?

No. you can't claim losses on the sale of personal use property.

But if it were a gain, I would have to claim a capital gain?

Stick to your other question.  You said it was a rental?

Family issue

Your question was answered in the other post ... yes, a gain is taxable .  If you sell a rental then not only is the gain taxable but you also MUST recapture the depreciation allowed or allowable even if you didn't take any.

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