Questions for the Tax Lady: September 21st, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: If I sell my house at a loss, can I deduct that amount on my income tax return?

No, you cannot deduct the loss of funds from the sale of a personal residence. However, if the home was an investment property, and not your principal place of residence, then you may be able to deduct a capital loss. However, I recommend you have a tax professional review your finances before taking such a deduction.

Question #2: I ran out of time to trade in my car before the Cash for Clunkers program expired. Do you know it will ever come back?

Although many people have praised the Cash for Clunkers program, it does not look like it will get another extension. The program was successful in increasing auto sales, and provided a decent economic boost, but there has been no serious mention of bringing it back. However, there are other similar programs such as “dollars-for-dishwashers,” that are likely to begin in the next few weeks.