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tax deduction property loss

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CJBMD
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tax deduction property loss  Reply with quote  

I bought a house which was discovered to have mold. Remediation attempts were made, but there was alway more mold. We couldn't live in the house. We had to live elsewhere while we sued the home inspector and the seller (whom we believed had knowledge of the problem). Both filed bankruptcy.

I kept paying mortgage and utilities and insurance. We couldn't live in the house so began negotiations with the mortgage holder, ultimately settling on a lump sum payment plus monthly payments for 5 years. They declared the deal a foreclosure on our credit report.

Are my payments to the bank (lump sum and monthly ) deductible due to "loss" due to mold?
Post Thu Mar 29, 2012 6:47 am
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coaster
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Man. that's a really sticky one. I think you're going to have to shell out some more cash for a professional opinion; and best get it from a tax lawyer, not an accountant. First, the issue of proving what exactly the loss is, in dollars and cents, and then when the loss is incurred, so which tax year it gets deducted in, are going to depend on the details of the agreement, who has the title now, or when it gets transferred, when the lien is removed, what the market value is (appraised value in lieu of market), expenses of the remediation, who paid for those, what the value of that was against the value of the property, the living expenses while that was ongoing, any damages or compensation, how much of the loss is being claimed by the mortgage company,

... and on and on and on for hundreds if not thousands more details ...

Honestly, there's no simple yes or no answer. And don't bother asking the IRS, this is way too complex for their 800 number taxpayer help line.

This has obviously been your life's calling for some time; it's going to continue for awhile longer. Best wishes and good luck. You need it and you deserve it.

BTW, "due to mold" has no bearing on the question.

Isn't it the pits that homeowners insurance companies have been ammending policies to remove mold as an insurable loss? Did this happen to you before or after? Maybe there's an insurance claim in it for you?

~Tim~
Post Fri Mar 30, 2012 6:11 am
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albertofair34
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Re: tax deduction property loss  Reply with quote  

You may deduct the loss on the sale of a house if you've converted it to investment property. That means making it a rental, for which you collect rent from a tenant and pay non-homestead property taxes.
Post Wed Jan 14, 2015 7:22 am
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losangelescpa
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Property losses may mean valuable tax breaks.Generally, you may deduct casualty and theft losses relating to your home, household items and vehicles on your federal income tax return. You may not deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement, and you reduce the loss by the amount of any reimbursement or expected reimbursement. Property damaged or destroyed by "act of God" which includes floods, fire, earthquakes, landslides, storms, tsunamis, volcanic eruptions and windstorms.

Source: losangelescpafirm.blogspot.com
Post Tue Feb 17, 2015 11:12 am
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