Posted on: 22nd Feb, 2010 06:34 am
I have made a downpayment on purchase of a real estate property. However, due to some differences with the builder later on, I have cancelled the deal. Could I claim the 'sunk cost' of the downpayment as a deduction??
it's safe to say that you lost your deposit, i guess...right? i'd try to get it back if possible as a first step. as a second step, your best bet is to query the irs directly or discuss this with a tax advisor.
Thank You! I have found out that Pub 530 (Tax information for Homeowners) mentions that forfeited deposit or down payment is not allowed as deduction.
However it does'nt mention whether it may still be allowed as capital loss if the property was used for investment purpose. Need confirmation on this point.
However it does'nt mention whether it may still be allowed as capital loss if the property was used for investment purpose. Need confirmation on this point.
i'd have a hard time believing that it would be a capital loss inasmuch as you never owned the property, but that's simply an opinion and i dare say you don't want to take it and run with it. again, you may want to check with a tax advisor or go back to the irs - you may want to speak to someone there this time, though.