Determining Investment Property Tax Loss
Ask the Real Estate Lawyer: Real Estate Law Q&A
REM #LAW 700
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A reader is wondering how much of
the loss he took on an investment property can be deducted on his income tax.
Ilyce and Sam explain that it depends on the person's profession and if he is
not in the real estate business, his deductions are limited.
Q: What happens when you sell an investment property at a loss? Can the loss
be claimed on your federal or state incomes taxes?
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On an income tax return, can you deduct rental and management company fees?
A: How rental properties affect income taxes pose quite a number of tricky
questions. As a general rule, costs relating to the ownership, maintenance and
leasing of your property offset any income from the property. If you have costs
that exceed your income, you have a loss.
If real estate is your full-time profession, you can fully deduct your loss
from your income taxes. If you are not in the real estate business you will
be limited in the amount of money you can deduct as a loss from your income
You should consult with an accountant to assist you in sorting out all of your
expenses and determine the loss from the investment property.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce
R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your
Home Faster and For More Money In Any Market. If you have questions for
them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022
or contact them through Ilyce’s website www.thinkglink.com