Loss on investment property

[Anonymous]

We owned a house in another state (lived in the house until we had to move east for jobs). Bought it in October 2007 for $350K, moved east in July 2009.

Rented the house at a loss from August 2009 to June 2013, had over $40K in "unrealized" losses including depreciation.

FINALLY sold the house last month for $325K (minus $5615 in seller contributions). $19.5K in realtor fees, another $10K or so in selling costs.

My assumption is that we will get to write off all losses as "realized" losses this year, bringing our HHI down.

Is this correct? Is there anything I need to know?

We will have our accountant do our taxes, of course, just want to know what I should expect.

Thanks

[Anonymous]

Anonymous wrote:We owned a house in another state (lived in the house until we had to move east for jobs). Bought it in October 2007 for $350K, moved east in July 2009.

Rented the house at a loss from August 2009 to June 2013, had over $40K in "unrealized" losses including depreciation.

FINALLY sold the house last month for $325K (minus $5615 in seller contributions). $19.5K in realtor fees, another $10K or so in selling costs.

My assumption is that we will get to write off all losses as "realized" losses this year, bringing our HHI down.

Is this correct? Is there anything I need to know?

We will have our accountant do our taxes, of course, just want to know what I should expect.

Thanks

I think I have looked that up and the answer is no you cannot claim any but if someone can prove me wrong, please chime in as well cause I am in the same boat.

[Anonymous]

Anonymous wrote:We owned a house in another state (lived in the house until we had to move east for jobs). Bought it in October 2007 for $350K, moved east in July 2009.

Rented the house at a loss from August 2009 to June 2013, had over $40K in "unrealized" losses including depreciation.

FINALLY sold the house last month for $325K (minus $5615 in seller contributions). $19.5K in realtor fees, another $10K or so in selling costs.

My assumption is that we will get to write off all losses as "realized" losses this year, bringing our HHI down.

Is this correct? Is there anything I need to know?

We will have our accountant do our taxes, of course, just want to know what I should expect.

Thanks

Maybe but you'll also have to pay the 25% recapture tax on the total amount of depreciation you claimed while you owned it. Even if you didn't actually claim the depreciation, it will be deemed that you did.

[Anonymous]

I wouldn't assume anything. You should have taking depreciation deductions during the rental period. It may be possible to take a loss if you can show that you would have had a loss based on the fair market value of the house in 2009.

[Anonymous]

Yes, you will realize it at sale. I presume op makes over the income threshold to write off losses in the tax year he incurred them. He will pay recapture tax on the depreciation, but will also have capital gains losses.

[Anonymous]

Anonymous wrote:Yes, you will realize it at sale. I presume op makes over the income threshold to write off losses in the tax year he incurred them. He will pay recapture tax on the depreciation, but will also have capital gains losses.

OP here.

Yes, we are over the income threshold (HHI ~$220K).

Thanks