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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?
(article continues below useful links)

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 taxes.

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




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