Question on claiming a loss on taxes after the fact

[tominboise]

Probably a stupid question, but here goes. We sold a vacation property several years ago and took a loss on the sale, of around $60k. I claimed the $3k loss on that years taxes, but have not since (don't ask why, I don't really know why I dropped the ball).

Is it possible for me to start claiming the remainder of that loss going forward ($3k per year)?

 

[jebmke]

Losses on property held for personal use are not deductible at all generally.

 

[OldShooter]

Losses on property held for personal use are not deductible at all generally.

Yup. My understanding too. Heads they win, tails you lose.

 

[gauss]

Uncle Sam is a partner in any profits from personal property -- but not the losses.
Fickle Uncle.

-gauss

 

[tominboise]

Darn. Well, thanks for the info and I'll keep on keeping on.

 

[Sunset]

If it was a rental, wouldn't the loss be allowed , as they allow yearly losses and of course gains on rentals each year.

 

[gauss]

^Probably

The personal property rules are different for property held for investment or business.

-gauss

 

[Dash man]

https://www.irs.gov/taxtopics/tc409

“Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.”

 

[Sunset]

OP - was it a rental or just personal use property ?

 

[tominboise]

OP - was it a rental or just personal use property ?

It was personal use property.

 

[ERD50]

... I claimed the $3k loss on that years taxes, but have not since (don't ask why, I don't really know why I dropped the ball). ...

It was personal use property.

Oooops! Probably a good thing you didn't keep deducting the $3K, since the consensus here is that it was not allowed.

Geez, while the "right thing" to do is file an amended return, that could just create a lot of paperwork and angst over what might only be ~ $450 (15% marginal?).

I just read the IRS has three years to question you on it. So if you filed 'several years ago', I'd probably lean towards letting a sleeping dog lie, and not let it bother my conscious, since it appears to be an honest mistake (and tax laws are too complex for the common man - it's just not right to apply 'ignorance of the law is no excuse' when the laws/regs are complex).

But keep your nose clean - if they do find something in a recent filing, I think they can go back 10 years...

-ERD50

 

[OldShooter]

Oooops! Probably a good thing you didn't keep deducting the $3K, since the consensus here is that it was not allowed.

Geez, while the "right thing" to do is file an amended return, that could just create a lot of paperwork and angst over what might only be ~ $450 (15% marginal?).

I just read the IRS has three years to question you on it. So if you filed 'several years ago', I'd probably lean towards letting a sleeping dog lie, and not let it bother my conscious, since it appears to be an honest mistake (and tax laws are too complex for the common man - it's just not right to apply 'ignorance of the law is no excuse' when the laws/regs are complex).

But keep your nose clean - if they do find something in a recent filing, I think they can go back 10 years...

-ERD50

+1 My oft-stated philosophy is "Do not wake sleeping bears."

 

[tominboise]

I will have to go remember what year we sold that cabin and look at the tax return. I may be disremembering things as to how I filed them.

 

[Sunset]

I will have to go remember what year we sold that cabin and look at the tax return. I may be disremembering things as to how I filed them.

Good [-]covering[/-] recovery in case IRS is reading

 

[RunningBum]

Most tax programs will use the previous year and carry over the unused capital loss and use it against current gains and then up to $3000 extra. Make sure you haven't been doing this every year without realizing it since you shouldn't have claimed the loss in the first place.

 

[COcheesehead]

TurboTax asked me if I was eligible for a special state cap gains tax exemption on the sale of my home. By my reading I thought it applied. It did not. The state tracked me down three years later and I had to write a check out for the difference plus interest and penalty.

 

[Jerry1]

TurboTax asked me if I was eligible for a special state cap gains tax exemption on the sale of my home. By my reading I thought it applied. It did not. The state tracked me down three years later and I had to write a check out for the difference plus interest and penalty.

Any time you get a finding from the IRS, always ask for the interest and penalty to be waived. Nothing fancy, just make sure they understand it was an honest mistake or misinterpreted handling and not a malicious entry.

I’ve never had them give up the interest but they usually drop the penalty.

 

[COcheesehead]

Any time you get a finding from the IRS, always ask for the interest and penalty to be waived. Nothing fancy, just make sure they understand it was an honest mistake or misinterpreted handling and not a malicious entry.

I’ve never had them give up the interest but they usually drop the penalty.

It was a state issue, not the IRS, but still a good point.

 

[tominboise]

Checking back through my paperwork, it was in 2017 and we did not deduct the $3k. It depressed me to be reminded about how much I was paying in income taxes when I was working, though.

 

[MichaelB]

Checking back through my paperwork, it was in 2017 and we did not deduct the $3k. It depressed me to be reminded about how much I was paying in income taxes when I was working, though.

But just think how nice it is now to not have be working or paying all those taxes!

 

[pb4uski]

+1 My oft-stated philosophy is "Do not wake sleeping bears."

+2 If they figure it out they will send you a bill.

 

[gauss]

Any time you get a finding from the IRS, always ask for the interest and penalty to be waived. Nothing fancy, just make sure they understand it was an honest mistake or misinterpreted handling and not a malicious entry.

I’ve never had them give up the interest but they usually drop the penalty.

+1 Good advice.

Note that they do NOT have the legal authority to waive interest, but the penalty part is left to their discretion.

-gauss

 

[ncbill]

At $3k/year the OP likely never would have been caught even had it been taken for 20 years.

I'm carrying forward LT capital losses so that $3k deduction is on my return every year & might well be until I die.

 

[youbet]

^^^^^^

You don't have any gains that you're offsetting?

 

[ncbill]

^^^^^^

You don't have any gains that you're offsetting?

Hopefully one day.