Q. My wife and I purchased an $80,000 house in 1989. We now want to buy another home, but we must first sell the one we have. After all the fees and commissions are paid, we will lose about $2,500 on the sale.
Can we count this as a "capital loss?" It sure would ease th sting.
A. Sorry, but there is no such thing as a capital loss on the sale of a personal residence, at least not for income tax purposes. In other words, you can't deduct the loss on your tax return.
However, if you had made money on the sale, it would have been considered a capital gain and, under certain conditions, you would have been required to pay tax on the profits. (It may not seem fair, but it's the law.)
You can, however, deduct the loss on the sale of a rental property. Therefore, if you opt to rent the house for now and sell it later, the deduction would be yours. But first, you must decide if it's worth the hassle.
(Send your questions on personal finance to Glenn Burkins, The Philadelphia Inquirer, 400 N. Broad St., P.O. Box 8263, Philadelphia, Pa. 19101. Questions cannot be answered personally.)