Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 03-30-2012, 12:57 AM
Junior Member
 
Join Date: Mar 2012
Posts: 2
A gain on a loss on a home sale?

Am I missing something here? This is a sale of a simple main residence.

We sold our old house for $131500 and had an adjusted basis of $141000. Selling expenses were around $9000 so we have realized proceeds of $131500 - $9000 = $122500. Based on basis that gives me a loss of $18500. On Schedule D I have to add back the loss as a non deductible loss so I end up with a gain ($131500 sale - $141000 basis + $18500 adjustment to gain/loss = $9000)?

Maybe I'm just looking for logic here (hahaha). Is the logic that I'll only be taxed at 15% for this portion of my income rather than at a higher rate based on the later portions of Schedule D, or am I really messing something up?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 03-31-2012, 07:00 PM
Junior Member
 
Join Date: Mar 2012
Posts: 2
Publication 523 states

If you have a loss on the sale of your main home for which you received a Form 1099-S, you must report the sale on Form 8949 even though the loss is not deductible.

Because the loss is nondeductible, enter ‘‘L’’ in column (b). Enter the amount of the nondeductible loss as a positive number in column (g).


My understanding is that the loss is determined from amount realized less adjusted basis, thus the $18500 nondeductible loss figure I had going into column g. I can't find anything in the instructions that state to do what you're telling me to do.

EDIT:

OK buried deep in the 1040 Schedule D Instructions, it tells me add back in those additional costs of sale and also to put an O in column b. Thanks.


Last edited by SeanMcD98 : 03-31-2012 at 07:08 PM.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 03-31-2012, 07:11 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
“My understanding is that the loss is determined from amount realized less adjusted basis, thus the $18500 nondeductible loss figure I had going into column g. I can't find anything in the instructions that state to do what you're telling me to do.”--->Sorry it was mybad;correct. the house was not an income producing property. Most of the time you owned it, you lived in it or were trying to sell it. It was not held as an investment. You cannot deduct a loss on the sale of the house.Howevr, you can deduct mortgage interest and real estate taxes on both houses for the parts of the year you owned them, assuming the total mortgages were less than $1 million. If the combined mortgages were more than $1 million, your deduction is going to be reduced to the interest on $1 million



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 03-31-2012, 08:42 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
“Because the loss is nondeductible, enter ‘‘L’’ in column (b). Enter the amount of the nondeductible loss as a positive number in column (g).”--->Correct; in certain situations, you must put a code, code L( since you have a nondeductible loss other than code W loss, in column (b) of Form 8949 and report the difference between column (e) and column (f) adjustment to your loss,($18,500) as a positive amount in column (g), then go to Sch D. For example, if you entered $31,500 in column (e) and $50,000 in column (f), enter $18, 500 in column (g).
“My understanding is that the loss is determined from amount realized less adjusted basis, thus the $18500 nondeductible loss figure I had going into column g. I can't find anything in the instructions that state to do what you're telling me to do.”--->Correct. You may need to complete columns (b) and (g) as you have a disallowed loss. You can not claim a loss on the sale of a personal residence.

“OK buried deep in the 1040 Schedule D Instructions, it tells me add back in those additional costs of sale and also to put an O in column b.”--->You need to Include in this column any selling expense such as broker’s fees, commissions unless you reported the net sales price in column (e). If you include any expenses in (e) ,then , you need to enter O in column b.


Last edited by Wnhough : 03-31-2012 at 09:47 PM.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Gain-Loss Netting theduke4 Capital Gains 0 01-03-2012 10:23 AM
Sale of partnership interest at a loss: Can I claim this loss on my tax return? jcp1376 Income 1 10-07-2011 04:14 AM
Stock Gain/loss johnnoris Income 1 01-30-2009 12:02 PM
If the Ownership/Use Test are not met, can the gain on sale of home be excluded? Redden Capital Gains 0 03-24-2008 06:25 PM
Can u write off a loss on sale of home? mongrel Capital Gains 1 01-27-2007 12:01 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.