No one wants to lose money on a house sale, but the hard reality is that it is sometimes unavoidable. This is bound to happen at some point for investors, especially when they are starting out, and it is a real concern for private homeowners as well. The following tips will help anyone who is being forced to sell a property at a loss soften the blow.

Claim The Loss On A Tax Return

In some cases, it is permissible to claim the loss on a tax return at the end of the year. This is usually only allowed if the property was used for commercial purposes and not as a primary residence. Sellers should take every tax advantage at their disposal to mitigate the loss. There are plenty of circumstances that will affect how the loss plays out on taxes, such as how long the property has been owned, whether losses have been sustained in previous years and, of course, the amount of the loss. Hire a tax professional if necessary to get the most out of the loss on a tax return.

Buy A Cheaper Property Next

For personal properties, the seller is most often forced to simply take the financial blow. A way to mitigate that, however, is to ensure the next property that is purchased is a cheaper one. It is always important to live within one’s means and buy less house than one can afford. This is especially true for someone who has just sold their home at a loss and has less money to work with when buying their new property. Be responsible and frugal in order to recover from the blow of getting less money for the previous house.

Rent The Property For Now

Another option is to rent out the property instead of selling it in the hope that the market will improve so the property does not need to be sold at a loss. This is a good solution for someone who hopes to invest in real estate anyway because they will not need the capital to buy a new rental property – they are simply transforming their old personal home into a rental. In some cases this may be delaying the inevitable, although in others it is a good tactic to have extra income on the side and for maintenance of the property until the market is more favorable.

Selling real estate at a loss happens, especially for investors. Owners who know this is going to happen should prepare for it and take steps to mitigate the damage, or put off selling the property until the market improves. By doing so, it is possible to get the most out of the property as possible.