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Hello! I have recently bought a new house that needs a little attention, nothing major, with a loan from the main residence. I had intentionally planned to go, but while I was doing patches and upgrades, I realized that I am happy with my new home and can not not cope with the changes in lifestyle that requires it. While unfortunate, I decided to put my house on the market after the renovations are completed, it may return to normal my life. I’ll try it for the original price I had paid for it to sell, originally evaluated and a loss of fees and charges which he. The housing market in this city is much better than most of the nation.J ‘said my loan officer about it, and they told me that I withdraw all costs, leading to the sale, as I am basically reflect the property, because I will not live in it, even though my loan is the principal residence. Is that true?

5 Thoughts on Sales of new pinball with primary residence loan with a loss of tax benefits?
  1. Reply
    Chas
    July 8, 2013 at 5:13 am

    Essentially yes. At the worst you argue the property value was the value of the purchase since it was so recent and the costs to fix it up occurred after you made the conversion to an investment. Your potential problem with the bank doesn’t affect the IRS treatment. The bank will just demand immediate repayment of the residence loan.

  2. Reply
    Bobbie
    July 8, 2013 at 5:42 am

    The original price that you had to pay for the purchase of this home plus all of the costs of your improvements that you have decided to make to it at this time in your life and then to try and sell it out to some one in the public would end up being your adjusted cost basis at the time and the date that this sale does happen to take place in your life.
    And then at that point in time you will know if you will end up with a gain or a loss on this sale of this flipped home house that you now have on hand.
    Hope that you find the above enclosed information useful. 10/02/2011

  3. Reply
    Russ B
    July 8, 2013 at 6:16 am

    For taxation purposes the title of the loan makes no difference in the taxable amount of income. However, it might cause other legal problems…depending on where the loan is from and what you represented to the loaning agency.

    And, if the return is audited it could work against you as to your intent on the original purchase being an investment property.

    Simply meaning you can’t have it both ways…and decide after the fact what your intentions were.

    So either it is fraud to begin with…if that was your original intent…or it is the purchase of a home which losses aren’t allowed! Note that a home doesn’t mean a house. A house can be many things it isn’t a residence until you live there!

    Hope it helps.

  4. Reply
    tro
    July 8, 2013 at 6:18 am

    the expenses and renovations can be deducted that are within 90 days of the sale
    if this will not sell quickly, and it goes more than 90 days, no

  5. Reply
    Michael Plaks
    July 8, 2013 at 6:46 am

    Please do yourself a favor and ignore other answers, as they are wrong, especially some bizarre 90-day rule and audit threats.

    What you have is a capital gain/loss transaction to be reported on Schedule D. The sale price will be whatever the agreed price will be at the time you sell. The “basis” there will be your initial purchase price plus ALL the other money that went into it:
    – closing costs on both ends
    – repairs/rehab – labor and materials
    – taxes
    – insurance
    – loan interest
    – advertising
    – etc

    Michael Plaks, EA, Houston TX
    Specializing in Real Estate tax law
    http://www.MichaelPlaks.com

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