/ Ask Terry Questions / Short Term Loss Selling Condo

Short Term Loss Selling Condo

By Terry Savage on November 01, 2021 | Housing / Real Estate

I live in Colorado and just bought a condo in Florida the end of Sept.   After being there, I decided not to move and will put it on the market, sell it. I bought it at $249,000, with closing costs, $251,700.00

I got it at below market price, market value is $255.  Let’s say it sell it at at $255K.

What are the tax consequences? I know I’ll loss money due to commissions (6%) and closing costs (3K) so a short term loss. I’m calculating a 14K loss. Renting it is not something I’ll do. I’d rather sell it, take the loss, and move on.

Secondly, is it true a short term loss can be used to offset gains? If so, which ones? I’m retired, my income sources are ordinary income, interest, dividends, short term capital gains, long term capital gains and qualified dividends.

Your website is great, I appreciate your style of keeping money matters simple. Thank you Terry

Terry Says

OK, since this is not a personal residence it is treated as an investment. Here are the rules for dealing with short-term losses since I’m presuming you’re referring to just a few month ago in September 2021 for the purchase:

The tax code allows you to use any amount of your short-term capital loss to offset capital gains for the year. First, you must offset any other short-term capital gains. If you still have short-term capital losses, you can then use the excess to offset long-term capital gains. Only after you’ve offset all of your other capital gains can you use any of your short-term capital losses to offset ordinary income.
Under current law, you can deduct $3,000 of capital losses against ordinary income and carry forward the remaining loss.
Under current law, you can deduct $3,000 of capital losses against ordinary income and carry forward the remaining loss.
For example, say you have a $10,000 short-term capital loss, a $6,000 short-term capital gain and a $5,000 long-term capital gain. You would first offset your entire $6,00 short-term gain, and then use the extra $4,000 of short-term capital losses to offset all but $1,000 of the long-term capital gain.

If your short-term capital losses exceed the limit for your filing status, you can carry forward the excess losses into future years when you can use them.

Having said all that — are you sure you don’t want to have a place in Florida?? It gets so cold in the winter in Colorado!

money

ASK TERRY

a personal
finance question