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Frequently Asked Tax Questions

Capital Gains, Losses/Sale of Home - Losses (Homes, Stocks, Other Property)

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Rev. date: 1/2009

Is the loss on the sale of your home deductible?

Capital Gains and Losses   Primary Residence   Selling Your Home

The loss on the sale of a personal residence is a nondeductible personal loss.

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Rev. date: 1/2009

I own stock which became worthless last year. Can I take a bad debt deduction on my tax return?

Bad Debt   Capital Gains and Losses   Cost Basis   Investment Income and Expenses   Worthless Securities

If you own securities, including stocks, and they become totally worthless:

• You can take a deduction for a loss, but not for a bad debt.

The worthless securities are:

• Treated as though they were capital assets sold on the last day of the tax year.
• Reported on Form 1040, Schedule D (PDF), in Part 1 or 2 depending on whether you held the stock short term or long term.
• And indicated by writing "Worthless" in the applicable column of Form 1040, Schedule D (PDF), Capital Gains and Losses.

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