@badhabitzs wrote:
Okay SweetieJean, where in Turbo Tax do we get that exclusion? We purchased a house in January and sold our other home (with a loss) in February. I'm still at a loss (no pun intended) with not being able to deduct the loss from the sale of our home.
Under the tax law, you can claim a deduction for losses on property (real property as well as tangible property) if it is held for investment, but you can't take a deduction for losses on personal property. That's not just houses, it's all personal property. You undoubtedly have sold used cars for less than you paid for them, maybe sold used furniture on Craigslist, or sold old clothing and household goods at a garage sale. That's all technically personal property sold at a loss, and it's never deductible. The fact that you can't deduct a loss on your home is just an extension of that.
It's also important to define "loss" -- loss doesn't mean being upside down, loss means selling for less than you paid. If you buy a house for $100,000, later refinance for $200,000, and then sell for $175,000, you don't have a $25,000 loss, you have a $75,000 gain or profit. The money you pay back because you are upside down is just the money you took out ahead of time when you refinanced; you took your profit out of the house when you refinanced instead of when you sold.
If you sold your home for an actual loss (less than you paid for it) you don't report it in turbotax unless you received a form 1099-S at the closing. If you did, you need to report the sale; there is a special section on the income page for "Sale of your home". You won't owe tax, but you also don't get a deduction, and the only reason you report it is that the IRS will want to see your tax return match the 1099-S.
There is also nothing to enter on your tax return for a 401(k) loan, unless you default on your payments or leave the job before the loan is repaid.
