Is the sale of vacant land for a loss considered a deduction or is the loss taken directly off my income?

[Hal_Al · Accepted solution]

The loss is taken directly off your income; but not exactly.  

The loss is a capital loss reported on form 8949. It then carries to schedule D where it is used to reduce any capital gains that you have. If you still have a loss, it goes on line 13 of form 1040 where it is deducted from other income before tax is calculated.

But there is a $3000 per year limit on capital losses being deducted from total income.  If your loss is more than $3000, only $3000 will be deducted on your 2016 return. The rest will carry over to next year. 

And convolutions like that are why you need expensive software, or tax people,  to prepare your taxes.

[pdow1]

sale of investment land for less than what was ordinally paid for.

can i take a loss and how much??

lets say i paid $22,000 and sold it for $7,000 .... can i take a 15,000 loss in deductions? or over several years?

found below post talking about this but it is old

The loss is taken directly off your income; but not exactly.  

The loss is a capital loss reported on form 8949. It then carries to schedule D where it is used to reduce any capital gains that you have. If you still have a loss, it goes on line 13 of form 1040 where it is deducted from other income before tax is calculated.

But there is a $3000 per year limit on capital losses. If your loss is more than $3000, only $3000 will be deducted on your 2016 return. The rest will carry over to next year. 

And convolutions like that are why you need expensive software, or tax people,  to prepare your taxes.

‎June 7, 2019 4:02 PM

[Hal_Al]

That old answer is still correct for 2024. 

Q. Lets say I paid $22,000 and sold it for $7,000 .... can I take a 15,000 loss in deductions? 

A.  Yes, but not directly from your total income.  You first deduct it from your capital gains, if any.  Then you deduct, up to $3000 (on form 1040) from you total income.

Q. Or over several years?

A. Several years, if the net loss is more than $3000.  In your example ($15K loss), it would take 5 years ($3K per year) to deduct the full loss (assuming you had no capital gains to offset).