question -- 2 investment property that i lost money on

General Real Estate Investing
1

I am trying to do turbo tax online and I have two properties that I lost 80k on but I cannot figure out where to write off the losses. I bought one house for 210k sold it for 245k but have expenses of over 40k so it was a loss of 15k.

the second I bought for 220k and it has not sold. I have over 40k expenses into this home as well.

I bought both of these myself and not through an llc or anything.

any help would be appreciated

2

We need just a little more information before anyone can answer your question. What are the dates for the purchase of each property and for the sale of the first property?

3

Bought both properties in Jan 08 sold the one property in nov 08

4

So you bought the properties to rehab and flip?

For the property you sold, report all your income and expenses on Schedule C. The cost of goods sold will include your purchase price, rehab costs, and holding costs. Do the same thing on your tax return next year if you sell the second property this year.

For Schedule C, property is not “acquired” until the year it is sold. So for the second property, the acquisition date you enter on Schedule C will be 1/1/09 if you sell it in 2009.

You can’t take any expense deductions for the property until you sell it.

5

Thank you that helps alot…

one more question on the second property it is in the process of foreclosure. how will that affect taxes if I cannot sell it before hand?

6
You can't take any expense deductions for the property

no deductions for the property (repairs/upgrades/closing costs etc) until sold, but you you CAN take deductions for other business expenses related to the project in the year incurred: cell phone, utilities, insurance, other holding costs, advertising, donuts for the workers, mileage, etc. These “soft costs” are not added to the basis of the property, and thus are deducted in the year paid, irrespective of the sale date.

Since Sch C is subject to SET, you want to take advantage of every valid business deduction you can to reduce your tax burden.

foreclosures can get complicated: loss of market value when bank takes it back, loss of equity, forgiven debt is income - this will all depend on your specific circumstances.