If you have questions about capital gains or losses of property on your tax returns, read on. You should be able to find everything you need to know about capital gains and losses here.
Let's get started. Pretty much everything you own is a capital asset. Doesn't matter if you use if to personal or investment reason. When you sell one of these capital assets the difference between the amount you bought it for and the amount you sold it for is your capital gain or loss.
Depending on if you lose or make money determines if your investment was a gain or a loss. Pretty simple stuff. It's a gain if the amount you made was greater than that which you bought it for. For example if you bought it for $3,000 and sold it for $4,500, your capital gain would be $1,500.
It is a loss if you sold it for less than you bought it for. For example you bought it for $4,000 and sold it for $2,000, your capital loss would be $2,000. You have to report all capital gains on your tax report but you may deduct only the capital losses that you had due to investment properties not any that you keep for personal use.
Basically if you invested money in a rental and sold it, you can report that. However if you bought a lake house for the weekends and sold it for less than you bought it, you can't report that. Your net capital gain is the amount in which your capital gain is higher than your capital loss. The tax rates you need to pay on these gains are less than those you normally pay on any other type of income. They are called maximum capital gains rate.
However, if your capital losses are more than your gains, you can deduct the different on your tax return, up to $3.000. If the amount of your capital loss is more than your limit on capital loss deductions then you can use the unused part on your next year's return as if it happened that year. You report all of your gains and losses on the IRS tax for Schedule D. The amount you put on that form are then put on line 13 of Form 1040.