Selling a rental property for less than it's worth

[Jon Haney]

Hi, quick question about selling a rental property for less than it's worth and tax implications.

I purchased a rental property on 9/1/2022 for $40k, paid $4k in closing costs, and over the course of 2023 paid around $4000 for upkeep and security on the property. 

I was planning to renovate and rent out, but squatters unfortunately became a nightmare and I decided to offload the property. I sold it on 9/22/2023 for $29k. 

Here's my question: Do I qualify for a tax deduction considering the substantial loss on the property? I've read online that this applies only for rental properties that are in possession for at least one year—I'm guessing I qualify?

Thanks for any and all help,

Jon

[Bill B.]

Id hire a tax guy because I’m pretty sure they’ll find a way to deduct at least some of it. You have somewhere between an $11k and $19k loss. But don’t forget with the high standard deductible this may not add up to much, especially if you’re married. 

If you have super basic taxes other than this, I would expect $100-$200 tax bill and you’ll know for sure if you can legally get some of that money back. Good luck.