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?
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.
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."
As @TaxPro+40 suggested, talk to a lawyer. Ask them about "Specific Performance."
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