Rental house lost value

Forum|Forum|3 years ago
March 10, 2023
3 replies
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Sold rental house in 2022. Prior to sale, renter made unauthorized changes (ie: moved walls to remove a bedroom) taking from 3 bedroom to 2 bedroom house. I understand that this reduced the sales price by approximately $20000. Is there a way I can claim that loss on my taxes? If so, would it be above the standard deduction, which I am already taking as I have very few other deductions (no mortgage interest, etc)?

TurboTax Home & Biz Windows

Best answer by Anonymous_

@vmwatson wrote:

Is there a way I can claim that loss on my taxes?

There is no way to deduct the diminution in value due to the tenant's actions unless you actually incurred costs in ameliorating (repairing) the damage or alterations.

In fact, you already realized a tax savings in the sense that the sales price was reduced, thereby reducing any potential capital gains tax and/or unrecaptured Section 1250 gain (depreciation recapture).

Anonymous_Answer

Employee

@vmwatson wrote:

Is there a way I can claim that loss on my taxes?

There is no way to deduct the diminution in value due to the tenant's actions unless you actually incurred costs in ameliorating (repairing) the damage or alterations.

JosephS1

No, unfortunately. You technically received the tax deduction in the reduced sales price. To take a deduction for the reduced value would essentially double the amount of "deduction" you are receiving. It may not seem fair, as I suppose many taxpayers with rental property (myself included) have been the victim of tenants who decide since they are renting they can do what they wish to do regardless of the property owner's agreement or disagreement with what it is they wish to do.

What is "Basis"

Sale of Rental Property - IRS

@vmwatson

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Mike9241

you did get the loss because what you got for sale was less than what it would have been