If I bought a house to flip it. Now a year later im selling at a loss. Is it deductable as a capital loss?

Question

1. I have never lived in it. Live over 100 miles away.

2. I have never rented it or tried to rent it, just had it listed immediately for sale after purchase.

3. When I purchased the house the mortgage rates were best under "second home" so thats how the mortagage was prepared. However, it was never used by anyone. Brand new.

4. I did deduct interest on the mortagage of this property last year.

5. I bought it to sell it. It was supposed to be an investment (bad situation.....)

Is this tax deductable for capital loss? I bought for $25,000 more than I am selling today 1 year+ after orginal purchase . I have never lived there.

Answer 1

So, you bought it as a second home so you could get a better rate.  It was never intended to be a second home from what you are saying.  Fraud was committed because you have to live in the home a certain amount of time to be considered a second home.  You had no intention of doing that.  Fraud is an ugly word, isn't it?  Better hope you don't get caught.  I just can't feel sorry for your loss.

Answer 2

Yes, but don't forget to calculate the full loss for the whole of that year. You must have had lots of additional expenses excluding the initial purchase price! Traveling costs, keep-up, repairs etc...

Have a really good think about what its really cost you!

Answer 3

I believe the loss can only be used to offset a capital gain. Unless buying and selling houses is your principal business, the loss is not deductible as an expense.

Answer 4

I made the biggest flip ever. I brought this house in shaker heights, ohio forclosed for 3,450 dollars. I just sold it for 150,000 i put 10,000 fixing it up but that was just for like the yard and carpet and unnessacary stuff. man that the biggest flip ever. i wanna do it again

Answer 5

Yes, it is a capital loss situation since this was a business purchase and not a residence.