Asked by: Simao Fullkrug
Asked in category: personal finance, personal taxes, personal finance, personal taxes
Last Updated: 23rd Jul 2024

How do I claim loss on sale of rental property?

You might be able deduct the loss from your taxes if you sell rental or investment property at a loss. The loss incurred by your personal residence when it was sold at a Loss is not deductible. To make the loss on the sale tax-deductible, the real property must be used to generate rental income or capital gains.



Also, you may be asked how to calculate loss on the sale of rental property.

Tax purposes, your gain or loss is determined by subtracting the adjusted basis of your property on the date you sell it from the sale price you receive (plus any sales expenses such as commissions). Your basis in property (the value of your total investment in property for tax purposes) cannot be fixed.

Passive losses can also be deducted when you sell a rental home. You can deduct suspended passive losses from the rental property's profit. To take this deduction you must make substantial amounts of your rental activities. The sale must be a taxable activity, meaning you must recognize income and loss for tax purposes.

Many people also wonder how to report a loss on a rental home.

  • Rentable property is income-producing and you must report the loss on the rental property sale on Form 4797, Sales of Business Property.
  • Is the loss of rental property taxable?

    You might be able deduct the loss from your taxes if you sell rental or investment property at a loss. If you sell your personal residence at a Loss, the loss will not be deductible. To make the loss on the sale tax-deductible, the real property must be used to generate rental income or capital gains.