The loss on the sale of your home is not deductible under the circumstances described in the provided excerpts. The key points from the retrieved information that support this conclusion are as follows:
- The Internal Revenue Service (IRS) Publication 523 (2023) explicitly states that if you sell your home at a loss, where the adjusted basis is greater than the amount realized, you cannot deduct this loss. It clarifies that while no tax is due on the money received from selling your home, the loss itself is not deductible.
- The Internal Revenue Code (IRC) § 121, which deals with the exclusion of gain from the sale of a principal residence, does not provide for the deduction of losses from the sale of a principal residence. Instead, it focuses on the conditions under which gain from the sale of a principal residence may be excluded from gross income.
- The regulation § 1.165-9(a) specifically states that a loss sustained on the sale of residential property purchased or constructed by the taxpayer for use as his personal residence and so used by him up to the time of the sale is not deductible under section 165(a).
- The IRS Private Letter Ruling PLR 8917051 and the IRS Written Determination - Letter Ruling LTR 8814034 both reiterate the principle found in section 165(c) of the Code, which allows deductions for losses only in specific categories that do not include the sale of a personal residence.
- Additionally, the IRS Revenue Ruling Rev. Rul. 90-79 and the IRS Written Determination - Letter Ruling LTR 8814034 further clarify that certain losses, including those on the sale of personal residences, cannot be deducted for federal tax purposes, even if a loss is realized on the sale or exchange of the property.
In summary, based on the information provided, the loss on the sale of your home is not deductible under current tax law and regulations.
Sources:
Rev. Rul. 90-79
§ 121. Exclusion of gain from sale of principal residence
IRS FAQ
Publication 523 (2023)
PLR 8917051
§ 1.165-9. Sale of residential property.
LTR 8814034
