We have an underwater mortgage on a vacation property we want to sell. If we sell at todays prices, we will have to take a $80,000 loss. Is this loss deductible from my federal income taxes? If so, can the deduction be applied over more than one year?
My wife and I separated last September and will be filing for divorce in a few months. The prior months saw me losing my job and we also had to sell our house at a substantial loss due to the housing market. Does the IRS ever lower money that will be owed due to these circumstances?