Can i use the shortsale as a loss on my 2010 income taxes?

Asked by Celia, Sarasota County, FL Wed Mar 3, 2010

I am trying to understand the shortsale procedure by asking a lot of questions and get a lot of different opinions before i proceed. I understand now that i owe no 1099 taxes as i have always been living in my own property and always had homestead. I also know that at a shortsale closing a lawyer will be present to make sure that
the sale is final and no money owed to the lender.
But my new questions is the 120000 i am loosing, the 60k i stuck into it as a down payment in 2005,
can i claim that for a loss on my next income tax? I just want opinions, i will get a professional to help
me at the end.

Help the community by answering this question:

+ web reference
Web reference:


Myke Atwater, Agent, Santa Rosa Beach, FL
Wed Mar 3, 2010
You really need to talk with tax person--as professional real estate agents, we really would be remiss to get into this type of recommendation. I wouldn't even give an opinion--opinions on such matters can come back to bite in the butt--If a judge asked me as a professional, where is my license that permits me to hand out recommendations, he'd have my real estate license in a heartbeat!!

What I tell each of my clients who ask these questions--I recommend they speak with their accountant, consult a real estate attorney, and speak with lending officers who you are working with in your transactions.

Best of luck,

Myke Triebold, GRI, LMC
Web Reference:
1 vote
James Gordon…, Agent, Hamilton, OH
Thu Aug 2, 2012
In a short sale you should have no loss but thanks to the Bush tax cuts of 2007 you should not have to pay taxes on your phantom income of 120,000. You need to check with an accountant to make sure.
0 votes
Shirley Byrd…, Agent, Roseburg, OR
Thu Aug 2, 2012
Realtors are not accountants or CPAs. My opinion is you cannot as it is your primary residence. You may also have a tax consequence due to the lender having a shortfall of the money loaned. You really need to consult with your CPA.
0 votes
Gerard Dunn, Agent, Chevy Chase, MD
Thu Jan 6, 2011
NO! You cannot take a loss for tax purposes on a primary residence.

You should also be aware that the lender can actually send you a 1099 for the amount "shorted". Instead of a deduction - you may be faced with paying taxes on your paper "gain".

Check with an accountant.

Good Luck!

Gerry Dunn
Associate Broker
Serving Maryland, D.C. and Northern Virginia
0 votes
gabriel palo…, Agent, Pompano Beach, FL
Thu Jan 6, 2011
This is a great question for you accountant. The variables to this question is a mere speculation based on facts that are undetermined or stated.
In all honesty it is privileged and private. The question is do you come out ahead? Remember whenever you make money, save money IRS sees the money. With short sales you may be forgiven but not forgotten.
0 votes
Eli Givoni-S…, , Boca Raton, FL
Wed Jan 5, 2011
Hi Celia,

You will definitely need to speak with a CPA regarding your tax question. You are welcome to have an attorney, as well. We specialize in short sales and would be happy to explain the process to you, and answer all your questions.

Please call us directly to discuss your specific situation. Our services are FREE to homeowners. We look forward to hearing from you.

Eli Givoni, Director
Serving all 50 states
0 votes
Karen Wantuck, Agent, Sarasota, FL
Wed Mar 3, 2010
See below for lots of the right answers.....and I believe that instead of getting a tax benefit when folks sell their homes in short sales, they receive a tax hit. Check it out with professionals in the tax business for the right answers. You don't want want the facts.
0 votes
Mark LeMenag…, Agent, Lake Nona Orlando, FL
Wed Mar 3, 2010
Celia, In what way are you losing $120,000? How much money have you put into the house and how much are you selling it for? For example, if you put in $60,000 and it being sold for $90,000, then you haven't lost any money.
0 votes
John Bennett, Agent, Orlando, FL
Wed Mar 3, 2010
Dave, can you explain adjusted basis for us?
0 votes
Dave Sutton, Agent, Portland, OR
Wed Mar 3, 2010
IRS publication 523 says on p.5: "Loss on sale. If the amount realized is less than the adjusted basis, the difference is a loss. A loss on the sale of your main home cannot be deducted."
0 votes
John Bennett, Agent, Orlando, FL
Wed Mar 3, 2010
Erich has it right, you need a Attorney or an CPA or both.
How are you loosing 120,000? did you have 120,000 in equity in the home? See that you put in $60,000 in so that might be loss under very certain conditions.
0 votes
Erich Whitem…, Agent, FL,
Wed Mar 3, 2010
You should consult a tax accountant or attorney, but generally, the IRS considers the amount of the loan that you did not repay as income, not as a loss, regardless of how much you put down on the property.
0 votes
Search Advice
Ask our community a question
Home Selling in Pompano Beach Zip Codes

Email me when…

Learn more