Contract for Deed, Capital Loss, and Taxes

USA Discussion in 'Individuals' started by SalukiGator, Mar 31, 2018.

  1. SalukiGator

    SalukiGator

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    Hi,

    I recently sold a house on a contract for deed and the price was $22k less than I paid for it. I have been trying to figure out how to declare the principal and interest payments I've collected from the buyer. I've looked into IRS form 6252 and pub 537 for installment sales and it appears that I cannot use that approach if there is a Capital loss on the property. Unfortunately, there is no reference on what I should do to declare the principal and interest. Also, it says that I need to claim the loss in the year of the sale, but I'm not sure that I can or how to do it. Any advice here would be appreciated.

    Additional background information is as follows. First, I am in Illinois. I purchased the home as my residence in 1999 and moved out to a new home in 2015. I sold my former home in 2017 and it was unoccupied from the time I moved out until I sold it. I was holding the property as an investment, I'd hope to do some repairs and upgrades and either rent it or sell it. However, family health issues prevented me from having the time or capital to make said upgrades. WIth the cost of the utilities, insurance, and taxes, it became too expensive to hold onto.

    Thanks for taking the time to read my post. I appreciate your help.
     
    SalukiGator, Mar 31, 2018
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  2. SalukiGator

    Drmdcpa VIP Member

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    If there is no gain, no capital transaction is needed. You might want to report the sale on Schedule D especially if a 1099S was issued but report the loss as Non deductible principle residence (personal) loss.

    The interest gets reported on Schedule B. You should also be providing the buyer with a 1098 or your name, address and social security number so they can deduct the interest.
     
    Drmdcpa, Apr 2, 2018
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  3. SalukiGator

    SalukiGator

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    Thank you. Glad to hear the feds are happy to have their hand on the smallest of capital gains, but a workin' man loses dough on his primary investment and gets squat for it. Well, thanks for the advice.
     
    SalukiGator, Apr 5, 2018
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