Tax deduction for loss of deposit made for purchasing home

[protoss_IHB]

We initially booked a home and paid deposit of $10K , but later on backed out since we can't sale our current home. The builder told us that they are not able to return our deposit since it is too late in the game where they almost finish the construction, hence we had to lose that amount.





Is there a provision to in taxes to report this loss and claim deduction?


Thanks.

 

[bigmoneysalsa_IHB]

Seems that there is no such provision.





http://www.globalgoldtalk.com/taxes/51190-lost-deposit-forfeited-deposit.html





http://answers.yahoo.com/question/index?qid=20070327162940AAyj73B








My life for Auir.

 

[nirvinerealtor_IHB]

<p>protoss,</p>

<p>Have you review the contract for a good reason to back out? In reality, if you can not sell your house then you can not be qualified for another loan. This reason alone should allow you to get your deposit back. I have seen this all the time. Check with a good real estate lawyer. Good luck.</p>

 

[raymond_IHB]

Agreed with <a href="../../../account/155/">nirvinerealtor</a>. Builders will threaten you since you're no longer a buyer but that doesn't mean they're right. I'm assuming you're in California. We've always ended up returning deposits to buyers who threaten with legal action (and I'm talking public builders) because it's just not worth the hassle.





Unless you had paid $10k to cover options or upgrades, I don't see how they can keep your money since your loan was contingent upon the sale of your current home.

 

[nirvinerealtor_IHB]

<p>raymond,</p>

<p>Thank you for support me. You do need to bring in a lawyer. Average attonrey cost I have seen so far was $600.</p>

 

[GrewUpInIrvine_IHB]

<p>Was the original purchase contract "contingent" upon the sale of your home? If you are in the position of needing to sell your home in order to buy the new home (and qualify for the mortgage) you need a no penalty contingency clause. What did your contract say? As discussed above, even if there is no contingency clause, you still may be able to get the $$ back through negotiation and/or when a new buyer places a deposit to off-set your original purchase contract - Hoewever, if the 10k was for specific upgrades... it might not have been a deposit, but again, you should still be able to recoup these funds when a new buyer steps in to fill your shoes... otherwise the buidler gets your 10k for free? (on top of the 10k from the new buyer's deposit) Courts really don't like that type of result.</p>

<p>PS. Is there any reason why you don't want to disclose "who" the builder is that is not returning/disputing your deposit?</p>

 

[WeOnlyBuyNew_IHB]

Protoss,


I just wanted to share with you my experiences with backing out on non-contingent housing contracts. I have successfully backed out of 3 contracts with the following builders: Shea Homes, William Lyon, and Standard Pacific. I did this during the real-estate heyday- 2000- 2003. Every contract always said that they would not return my deposit.





This is what the sales agents always told me. Builders always return your money eventually, because they cannot charge twice for the same product. It's just a secret real estate code.





Shea Homes- they held onto my deposit until the home I had tried to purchase was sold and I asked for it back. I kept calling the sales office to see if the house was sold. Once it was, I called the headquarters and asked for the deposit back. They sent me a check for the full amount of the deposit.





William Lyon- same as Shea Homes.





Standard Pacific- When we fell out of escrow, we had put about $15000 in upgrades and a $10,000 deposit. We fell out about a 1.5 months before closing (no flooring choices made yet.) The sales manager told me that our deposits for everything would be returned as soon as another buyer was found and closed escrow. That took about 6 months. We got everything back, minues $100 for escrow fees.





Basically, builders don't want a bad rap, so generally if you are persistent and patient enough, you can get your money back. If reasoning with them doesn't work, then maybe you should try this.... The OC register seems to like real estate scandals, you should tell your builder that if they keep your money, you will do 10,000 dollars worth of bad advertising for them by telling your story on every single message board on the OC register, etc. That should scare them a little. I hope this helps.