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Steve_717
Level 1

Loss on house sale due to move … how to claim?

I moved from Maryland to Florida last October 2020.  I sold my home at a loss.  I don’t think I was able to take a deduction for this on my 2020 taxes.  Why?  Also, now that I have established an LLC in Florida, could the loss be a business expense?

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dclick
Employee Tax Expert

Loss on house sale due to move … how to claim?

Thank you for your excellent question!

If you sell your home at a loss, can you deduct the amount from your taxes? Unfortunately, the answer is no. A loss on the sale of a personal residence is 
considered a nondeductible personal expense. You can only deduct losses on the sale of property used for business or investment purposes.

This is covered in great detail in the relevant IRS publication here:
https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home

If your LLC was formed in the current year, you would have no deductions for the prior year unless you had business operations at that point. In which case you would have home office deductions. However, these will still not offset the vast majority of your capital loss, as depreciation reduces basis and increases the amount of capital gain.

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3 Replies
dclick
Employee Tax Expert

Loss on house sale due to move … how to claim?

Thank you for your excellent question!

If you sell your home at a loss, can you deduct the amount from your taxes? Unfortunately, the answer is no. A loss on the sale of a personal residence is 
considered a nondeductible personal expense. You can only deduct losses on the sale of property used for business or investment purposes.

This is covered in great detail in the relevant IRS publication here:
https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home

If your LLC was formed in the current year, you would have no deductions for the prior year unless you had business operations at that point. In which case you would have home office deductions. However, these will still not offset the vast majority of your capital loss, as depreciation reduces basis and increases the amount of capital gain.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Steve_717
Level 1

Loss on house sale due to move … how to claim?

Thanks for the detailed reply!!  All good information to know.

dclick
Employee Tax Expert

Loss on house sale due to move … how to claim?

My pleasure Steve! Glad I could assist you. 🙂

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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