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Show forfeited deposit on property as capital loss while tax filing
We paid 5% deposit to the builder to buy a property . Our house possession is in couple of months. But we are rethinking our decision due to market shift. If we back out now from the house, will we be able to report forfeited deposit as capital loss while filing taxes? I see that only rental property deposit loss can be claimed, what can we do to show that the property the we put money on was intended for the rental use?
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Show forfeited deposit on property as capital loss while tax filing
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Show forfeited deposit on property as capital loss while tax filing
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Show forfeited deposit on property as capital loss while tax filing
Forfeited deposits on the purchase of your personal residence are not tax deductible.
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Show forfeited deposit on property as capital loss while tax filing
"Nondeductible payments.
You can’t deduct any of the following items.
Insurance, including fire and comprehensive coverage, mortgage insurance, and title insurance.
Wages you pay for domestic help.
Depreciation.
The cost of utilities, such as gas, electricity, or water.
Most settlement costs. See Settlement or closing costs under Cost as Basis, later, for more information.
Forfeited deposits, down payments, or earnest money."
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Show forfeited deposit on property as capital loss while tax filing
while not a tax issue, talk to a lawyer about what it could really cost you if you signed a contract for purchase and then back out. you might be surprised
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Show forfeited deposit on property as capital loss while tax filing
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Show forfeited deposit on property as capital loss while tax filing
As @TaxPro+40 suggested, talk to a lawyer. Ask them about "Specific Performance."
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