I lost the earnest money and upgrades money in a investment property (rental house) can I declare this as a loss on my tax return??

[maraujo68]

I made an investment in a house in construction ,my intent was rent the house when completed... paid for some upgrades and earnest money a total of $25K and because of an issue, house was close to a landfill, I back out of the offer and I lost the earnest money and upgrades money can I declare this  as a loss on my tax return?? I am think it was an investment and I lost the money...   and if yes, what are the form and steps to do this in the online Turbotax software?

[evelynm]

This is from a Champ:  lost-earnest-money-deposit-on-a-house-that-i-intend-to-use-as-the-rental-property 

If you lost earnest money due to a failed business purchase of a rental home, you may claim the loss. The loss would be considered a capital loss you would write off on your Schedule D. 

In the program, go to: 

1. Federal
2. Investments 
3. Stocks, Mutual Funds, Cryptocurrency, Collectibles, etc. 
4.  description forfeited escrow deposit to buy rental property

• For 'Date Acquired', enter the date the money was placed in escrow.
• For 'Date Sold', select the Alternate Option and choose "Worthless".
• You will choose "Worthless Short Term" if the money was in escrow for less than 1 year.
• You will choose "Worthless Long Term" if the money was in escrow for 1 year or more.
• The cost would be the amount of earnest money you put down on the property.
• The sales price would be $0.
• You did not receive a 1099-B will be the cost basis 

[EleanoreS]

I am sorry this investment opportunity did not work out as you would have hoped.  The good news is that, as this was an investment property, you can claim the loss on your tax return.

The loss would be treated as a capital loss and reported on Schedule D of your tax return. For the date acquired, you would use the date the money was placed in escrow.  The loss would be long or short term depending on how long the funds were in escrow.  The cost would be the amount of serious money you put in.  The sales price would be zero,

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