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Randy129
New Member

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

 
1 Best answer

Accepted Solutions
bwa
Alumni
Alumni

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

I'm with pk - I'm not sure what you're asking.  However, as a summary, very few of the costs in the purchase and sale of a personal residence are deductible, and the loss on a residence is not deductible..

Almost no closing costs incurred on a sale of a residence are deductible. An exception is any mortgage interest or real estate taxes charged at closing to bring them up to the closing date. All other closing costs (Title fees, real estate commissions, documentary stamps, credit report costs, costs of an abstract, transfer taxes, home inspection, flood certificate, attorney fees, etc. ), instead of being deductible, reduce the sales price of the property (or increase the cost if you receive a Form 1099-S.)

On the sale of a personal residence, reducing the sales price would reduce the gain. However, there may not be any tax advantage in doing so, as in most instances the gain on the sale of a residence is wholly or partly exempt from tax anyway.

For the sale of a residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.

(You may have a smaller exclusion if the property was used as a rental during the five year period, and you may have income from recapture of depreciation if you claimed an office in the home deduction for the home.)

Most expenses at closing on the purchase or refinance of a home, second home, vacation home, timeshare, etc. are not deducted but added to the cost of a new home. There are a few exceptions - the following would be deductible:

  • interest paid at the time of purchase (the charge at closing would normally be done for interest up to the date of first payment.),
  • real estate taxes charged to you,
  • points (sometimes called origination fees and expressed as a percentage of the amount borrowed.)  On a refinance they need to be amortized over the life of the loan or 84 months, whichever is less, unless the points were used to improve your main home, and
  • private mortgage insurance costs but, if prepaid, only the amount allocable to this year based on an 84 month amortization.

Title fees, real estate commissions, appraisal costs, home inspections, documentary stamps, credit report costs, costs of an abstract, escrow fees, transfer taxes, flood certificate, attorney fees, etc. are not deductible, but are added to the cost of the property.



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8 Replies
pk
Level 12
Level 12

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

what do you mean "Purchase of our new condo at a loss"? Did you mean sale of home at a loss and purchase of a condo ?
Texas Roger
Level 15

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

Also what do you mean by "Beverly"s withdrawal"?
Randy129
New Member

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

purchased condo at a loss from sale of our home.    yes
withdrawal all of her IRA to pay for new condo.
Texas Roger
Level 15

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

A loss is what you have when you sell something for less than you paid for it. You can't have a loss on something you just bought and haven't sold.
Randy129
New Member

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

Thanks
SweetieJean
Level 15

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

How much was the IRA withdrawal? You may need to make an estimated tax payment.
bwa
Alumni
Alumni

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

I'm with pk - I'm not sure what you're asking.  However, as a summary, very few of the costs in the purchase and sale of a personal residence are deductible, and the loss on a residence is not deductible..

Almost no closing costs incurred on a sale of a residence are deductible. An exception is any mortgage interest or real estate taxes charged at closing to bring them up to the closing date. All other closing costs (Title fees, real estate commissions, documentary stamps, credit report costs, costs of an abstract, transfer taxes, home inspection, flood certificate, attorney fees, etc. ), instead of being deductible, reduce the sales price of the property (or increase the cost if you receive a Form 1099-S.)

On the sale of a personal residence, reducing the sales price would reduce the gain. However, there may not be any tax advantage in doing so, as in most instances the gain on the sale of a residence is wholly or partly exempt from tax anyway.

For the sale of a residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.

(You may have a smaller exclusion if the property was used as a rental during the five year period, and you may have income from recapture of depreciation if you claimed an office in the home deduction for the home.)

Most expenses at closing on the purchase or refinance of a home, second home, vacation home, timeshare, etc. are not deducted but added to the cost of a new home. There are a few exceptions - the following would be deductible:

  • interest paid at the time of purchase (the charge at closing would normally be done for interest up to the date of first payment.),
  • real estate taxes charged to you,
  • points (sometimes called origination fees and expressed as a percentage of the amount borrowed.)  On a refinance they need to be amortized over the life of the loan or 84 months, whichever is less, unless the points were used to improve your main home, and
  • private mortgage insurance costs but, if prepaid, only the amount allocable to this year based on an 84 month amortization.

Title fees, real estate commissions, appraisal costs, home inspections, documentary stamps, credit report costs, costs of an abstract, escrow fees, transfer taxes, flood certificate, attorney fees, etc. are not deductible, but are added to the cost of the property.



View solution in original post

SweetieJean
Level 15

I want to see if I can take off expenses from the sALE OF MY hOME & PURCHASE OF OUR NEW CONDO AT A LOSS. also, iS THERE A WAY I can benefit from Beverly "s withdrawal

Loss on the sale of a personal residence is not deductible.
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