Legal Question in Tax Law in Indiana

tax consequences of real estate sale

I recently sold a home. The buyer secured a ''non-conformist'' loan through HUD. I paid his closing costs, my closing costs, his down payment, and realtor commission. Can these costs be claimed as a loss and be deducted from my taxes? The sale closed on August 18, 2003. Thank you for your help.

Asked on 8/22/03, 4:35 pm

1 Answer from Attorneys

John Cook Dunn & Cook

Re: tax consequences of real estate sale

The proper way to account for the costs are to include them as sales expenses, which are added to your basis to determine a gain or loss. If the home was your personal residence, this is moot as far as losses go, since you cannot deduct personal losses for tax purposes. Even if you had a gain, this is probably moot as the tax code allows an individual to exempt up to $250,000 from the sale of his personal residence if he lived there two years before the sale. This same exemption increases to $500,000 for married individuals.

If the home was an investment or a rental property, then you would have some tax benefit from the costs incurred. However, I suspect from your question that the home was your personal residence and you are somehow trying to find a way for those costs to be deductible.

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Answered on 8/25/03, 10:40 am

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