Author Topic: Real estate project in Mexico & tax loss question  (Read 723 times)

laureleastman

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Real estate project in Mexico & tax loss question
« on: January 28, 2018, 12:27:22 PM »
Hi everyone!

We're buying a piece of land in Mexico this year, and will build a residence over the next couple of years (could be our primary or could be a rental property, we're flexible)....

Looking to claim any rightful losses to offset other investment portfolio capital gains. If anyone has ideas I would be very appreciative!

Thanks so much to you all in advance!

cfoleverage

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    • CFO Leverage - Real Estate Accounting/Tax Consultant
Re: Real estate project in Mexico & tax loss question
« Reply #1 on: February 09, 2018, 09:35:54 AM »
Key details seem to be missing from your question.  What losses are you expecting? Are you intending on losing money on your mexican property?

Buying land and building a home are typically investment activities and a loss does not occur until you sell such an investment for less than you paid for it...

laureleastman

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Re: Real estate project in Mexico & tax loss question
« Reply #2 on: February 13, 2018, 01:13:14 PM »
Thanks cfoleverage

We're just spending money on the Mexican property.

We need the losses to offset other non-real estate investment capital gains.

Forgive my ignorance!

cfoleverage

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Re: Real estate project in Mexico & tax loss question
« Reply #3 on: February 13, 2018, 01:54:52 PM »
Ah, I see...

So unfortunately, the cost to buy and build the Mexican property will not be deductible, except for depreciation on the building once placed in service, i.e. once advertised for rent. The cost to maintain the property once placed in service may be a deductible expense and help offset gains in other places, <IF> the property is being used as a rental property. Be sure to research personal use of rental property if you intend on staying there for any amount of time, since personal use can disqualify these expenses.

Still unconvinced this is going to get you the result you want, as personally, I never plan to lose a dollar on my rental properties just to save a quarter on my tax return...  ;)