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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: sea_biscuit who wrote (145)7/30/2001 10:50:06 PM
From: GraceZ of 306849
 
You can take a capital loss on real estate that is an investment property. What you borrow or put down has nothing to do with it. The original basis for the building would be 500k. You minus the cost of the land to get your depreciation basis (usually 20%). You depreciate the building over 27.5 years. Every year you take off as an expense your interest on the mortgage (not principal), taxes, maintenence costs and that years depreciation. You minus these from any income you get on the property and then on any kind of active income you have. When you sell you have to add back the depreciation (or what you should have depreciated even if you didn't do it) to get an adjusted basis....you minus this from the net proceeds from the sale (sale price minus commish and closing costs) and you either have a capital gain or a capital loss.

As far as I know you can't deduct a capital loss on your primary residence, only an investment property (except maybe against future capital gains on your subsequent residences? I don't know).
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