Dear Valued Clients and Visitors: As our nation responds to COVID-19, our firm is taking precautionary measures by closely following and reinforcing the guidelines from the CDC and local health authorities. Our physical office is open on a intermittent basis. However, please be assured that we are open for business and ready to serve your needs.

If you have a tax problem or inquiry please call and if we are not in leave a message. A return phone call will be made within a short period of time. Now is the time to address your tax matter. We remain committed to our clients and colleagues through these unusual times. Please stay safe and healthy.

Law Offices of Robert T. Leonard, APC
Free Consultations Available
Toll Free 888-408-9486

Before you sell your house at a loss, read this

Imagine you want to sell your house. It is ten years old, meaning that you bought it near the height of the market and before the epic crash of 2007. You loved living there and the memories are still solid, but now it is an albatross that prevents you from getting over other financial issues in your life. A sale would be beneficial not because you taking troublesome debt off your hands, but you may even benefit from a tax break by selling the property at a loss.

This is how it is supposed to work, right?

You may be surprised that you may not realize that tax break you depended on. Under Section 262 of the Tax Code, no deductions are allowed for personal, living or family based expenses. So the value of that home you lost, you may not be able to claim it as a loss on your return.

Before you cringe, consider this. If the home was purchased originally for personal use, but you later rented it out after you moved, selling it at a loss could be viewed differently. Essentially, Section 165 allows for deductions for “any loss sustained that is not compensated for.” This means that a loss incurred in “any transaction entered into for a profit.” Simply put, a personal dwelling does not fit the description of a transaction entered into for a profit. Conversely, a rental property is a transaction that fits the description because people buy them as a way to make money.

So before you sell that house that is troubling you, consult with an experienced tax attorney

No Comments

Leave a comment
Comment Information

Send Us A Quick Message

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Law Offices of Robert T. Leonard, APC

Woodland Hills Office
21700 Oxnard Street
Suite 2060
Woodland Hills, CA 91367

Toll Free: 888-408-9486
Phone: 818-224-7935
Fax: 818-587-3833
Woodland Hills Tax Law Office

Los Angeles Office
10100 Santa Monica Blvd.
Suite 300
Los Angeles, CA 90067

Toll Free: 888-408-9486
Phone: 818-224-7935
Fax: 818-587-3833
Map & Directions

Call Today