I had put a 10% deposit on a new development in Florida. The builder has filed for bankrupcy. Can I write that off as loss against my earned income or has to be against rental income. I was intending to use the property as rental property.
Thank you.
It’s not really business bad debt from rentals. (Not like a tenant skipped out on you).
Neither do I think it’s a 1231 loss, because there has been no closing yet on the property (you don’t own the rental property yet).
I think that technically it is non-business bad debt. It goes on the Sch D as short term capital loss. You’ll need to document it.