One house floating, one under water

[MJA89]

What is the name of your state (only U.S. law)? FL and VA

I was divorced in 2009. My ex and I (both names on mortgage and deed) jointly own two houses, one in Virginia and one in Florida. She lives in the Florida house and we rent out the Virginia house. The Florida house is underwater about 70K. The Virginia house has bout 70k in equity, but we will owe capital gains tax and depreciation recapture (house purchased in 2001 for 244K, refinanced in 2006 for 341K, rented out since 2002). If we sell both houses this year can the profit from the VA house be used in covering the loss on the FL house and by doing so can we not be hit with the taxes on the 70K.

 

[LdiJ]

What is the name of your state (only U.S. law)? FL and VA

I was divorced in 2009. My ex and I (both names on mortgage and deed) jointly own two houses, one in Virginia and one in Florida. She lives in the Florida house and we rent out the Virginia house. The Florida house is underwater about 70K. The Virginia house has bout 70k in equity, but we will owe capital gains tax and depreciation recapture (house purchased in 2001 for 244K, refinanced in 2006 for 341K, rented out since 2002). If we sell both houses this year can the profit from the VA house be used in covering the loss on the FL house and by doing so can we not be hit with the taxes on the 70K.

Unfortunately no. The house in FL is a primary residence and losses may not be taken on a primary residence (because gains can also be excluded on a primary residence). The house in VA is a rental property and is subject to capital gains tax and depreciation recapture (with capital losses also being able to be taken on rental properties).

Sorry.

 

[tranquility]

Change the FL property to an income property and then sell it.