We had a rental property in Hawaii with a little house that was completely covered by lava in May 2018. There was no insurance (premiums = 20% of house value). The state has appraised the property down to $0 and is no longer charging property tax. Where can we use this loss as a deduction? What line? And can we use both the house and the land as a total loss - technically we still own the "land", however it is more than likely going to be worthless and uninhabitable for many decades.
You would claim the loss of a Rental Asset as a Terminal Loss on the T776 Statement of Real Estate Rentals. Indicate that the Class 1 building asset has been disposed of for $1. The remaining balance in the Class will be the amount of terminal loss on line 9948.
The land will be disposed of on the Schedule 3 and will result in a Net Capital Loss which can only be used to reduce past Capital Gains (3 years), current year gains or future (indefinite) gains.
You would claim the loss of a Rental Asset as a Terminal Loss on the T776 Statement of Real Estate Rentals. Indicate that the Class 1 building asset has been disposed of for $1. The remaining balance in the Class will be the amount of terminal loss on line 9948.
The land will be disposed of on the Schedule 3 and will result in a Net Capital Loss which can only be used to reduce past Capital Gains (3 years), current year gains or future (indefinite) gains.
Information at the following links may be useful:
https://turbotax.intuit.ca/tips/tax-rules-for-disposing-of-capital-property-6287
https://turbotax.intuit.ca/tips/dos-and-donts-cca-for-rental-property-explained-6377
Thank you! Very helpful! Would we claim the amount we paid for the property 7 years ago, the assessed value on the tax assessment or the fair market value just before the lava destruction?