If you sold your investment property for less than your cost basis, you have a deductible loss that you can claim when you go to file your taxes for the year.

Can you carry a loss on an investment property forward?

You can carry any remaining loss forward to offset capital gains and $3,000 of other annual income in future years until the loss is used up. If you obtained the investment property through a tax-deferred, like-kind swap, your cost basis might be lower than you think. A property swap is when you exchange one property for another.

What can you do with a loss on an investment?

You can use that loss to offset all your capital gains from other investments and up to $3,000 in income from other sources in the current year. You can carry any remaining loss forward to offset capital gains and $3,000 of other annual income in future years until the loss is used up.

Can a rental property be sold at a loss?

Rental Conversion. If you converted a personal residence into a rental property and then sold the property at a loss, you might still have a deductible loss. The cost basis for a converted property is the lesser of the purchase price or the market value when it was converted to a rental.

What makes a sale of a property a loss?

It factors in the costs associated with the sale such as the adjusted basis cost and depreciation. Selling an investment property for less than you paid for it or what it’s worth is considered a loss. The basis of the property is used to determine the amount of the loss.

How is the sale of an investment property taxed?

As with any other capital investment, you will report your loss from the sale of your investment property on Schedule D to your Form 1040 tax return. As long as you held the property for over one year, it will be treated as a long-term capital loss and you can use it to offset any other capital gains that you realize in the same year.