Home sale loss

Selling a house at a loss: is it a loss?

Price less selling costs, against what you paid and put in. See whether your sale shows a loss on paper, with the IRS's rule beside it.

Gain on paper $0

Type what you paid to start.

General information, not tax, legal or financial advice.

Sale price$ Selling costs$ What you paid$ Closing costs when you bought$ Improvements you made$

Selling costs are commissions, transfer tax and fees; the net sheet adds them up. Improvements add value or life to the home (a new roof, an addition); repairs do not count. Nothing you type leaves this page.

Gain worksheet

General information, not tax, legal or financial advice. This shows arithmetic only; it says nothing about what you owe. Take it to a tax preparer.

The loss, worked out

You paid $420,000, with $8,000 in closing costs and $12,000 in improvements: a basis of $440,000. You sell for $425,000 and pay $25,000 to sell.

Amount realized: $425,000 less $25,000 = $400,000.
Less the $440,000 basis: -$40,000 on paper.

Selling costs are what often turn a small rise in price into a loss: here the price is $5,000 above what you paid, and the sale still shows a loss.

What sellers ask next

Can I deduct a loss on selling my home?

Not on your main home. IRS Publication 523 says a loss on the sale of your main home is not deductible. A rental or investment property follows other rules.

How do I know if I sold at a loss?

Compare the amount realized, your price less selling costs, with your basis: what you paid, your closing costs when you bought, and improvements. If the first is smaller, the sale shows a loss on paper.

Is a loss the same as owing more than the house sells for?

No. A loss compares the sale with what you put in; owing more compares it with your mortgage. You can have one without the other. The mortgage page shows the second.

Do I still report the sale?

Whether you must report it depends on the forms you receive and your situation. Publication 523 and a tax preparer can tell you.