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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > claiming real estate losses on taxes
Expert: MEdusa - 11/3/2009
Question
My mother passed away two years ago and the mortgage company foreclosed on the house. A year later,after sitting empty with no power, the mortgage company told us that didn't want the house because it is a total loss. They said we could have it to do with what we wanted. We have since sold the house to the guy next door so he could have the lot. At the time of my mothers death, the house was worth in the $90K range. We sold the house and lot for $6K. Can i claim a loss on the sale of this property as an inheritance?
Answer
to your last point and only question - no. well, maybe.
but that said, there are always several issues...
did they foreclose while she owned it? or after she passed (did they take title to it? - which seems unlikely if they 'gave it back to you' a year later).
can you document the return of property to you?
it was worth 90k but what was the debt ? net value is what is important.
also, did the debt transfer to the beneficiaries? or did the bank forgive the debt to mom's estate?
in summary, the way i see it...
mom passed. owning a house worth $90k but wtih debt to bank of x.
son inherits house. bank still has debt to mom. but i doubt you ever signed or acceded to the debt. so, the question is how did it transfer to you outright? with the debt attached?
so you did not inherit $90k, but something less?
also, how can it have gone from 90k to $6k in oine year. the market is not that bad.
in a perfect world, you inherrited a $90k INVESTMENT property... and you sold it for $6k, so you could take that as an investment capital loss. IF you were intending on keeping it for sale, but the debt and what the real value at death are problematic. I doubt it was worth $90k to $6k is a crazy swing.
did i miss the sentence that while it sat there it caught on fire? what happened there.
?
more facts are needed to be definitive.
MEdusa
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