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Tax implications of foreclosed rental property where my name is on the deed (quit claim during divorce) but not on mortgage?

Miami, FL |

My ex-wife purchased property for rental/investment purposes prior to our marriage. During our divorce, she quit claimed the property to me, but the mortgage remained in her name solely. She declared bankruptcy a few years later, and the property went through foreclosure in 2012. Can I claim the property as a loss on my income tax this year? I had a Schedule E for the depreciation/rental loss the years prior to her bankruptcy but after our divorce.

Attorney Answers 3


Ordinarily as an owner you could claim a loss to the extent that you invested in the property. It does not sound like you made any investment. Also, you would have to see how the property was handled in her bankrupcty. If she claimed ownership of 100% on her bankruptcy schedule, there would be nothing for you to take as a loss.

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I agree with attorney Givner. Please verify the information with your ex wife. You do not want to invite a tax audit because both of you claimed the same property.

My comments are NOT LEGAL ADVICE. They are for informational purposes only. Actual legal advice can only be provided after you have signed an engagement letter. Answering this question does not create an attorney client relationship. Remember that without attorney client privilege you could possibly divulge information that can hurt your legal rights in the future. I am a tax attorney in Miami Florida. I can help you with your federal tax issues via a secure client portal if required.

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I agree with my colleagues. Avoid the tax audit.

This response does not create an attorney-client relationship. Unless you are already a client of the Law Office of Preston H. Oughton, pursuant to an executed fee agreement, you should not use, interpret, or rely on this response as legal advice or opinion. Do not act on any information in this response without seeking legal advice. Preston H. Oughton (904) 854-6336.

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