A Yes, but you must convert the home into rental property first. For tax purposes, your adjusted basis will become the fair market value at the time of the conversion—in this case, $225,000—rather than the higher amount you paid for the home. If you subsequently sell the home for $200,000, you can deduct a $25,000 loss ($225,000 basis minus $200,000 sales price).
Tip: On the other hand, you receive no income-tax benefit for selling a principal residence at a loss.
- Small Business Tax Deduction Strategies No matches