I invested in LLC that built homes for sale. Bank foreclosed on property. I lost 100% Is this tax deductable?
I was approached by a friend in 2005 who was building / selling luxury real estate in Colorado. He had been doing this for several years, and needed investors to fund several new homes for sale. I, along with about 10 other investors gave him money. We put our money into a pot, structured as an LLC.
Basically, when the housing market tanked, he couldn’t sell the house. Ultimately, the property was foreclosed upon and 10 of the 11 investors were out 100% of their principal. 1 investor, the first principal, was able to pull out his initial investment.
My question is this – since this was an investment property, am I able to write this principal off for tax purposes? I assume I am (by assume I mean hope) but I haven’t been able to find a definite answer on the IRS website.
Would be greatful for any answers or ideas on where to look for answers.
Wow. I’ve got some great responses – thanks all. I just wanted to clarify one earlier question.
I was an investor in the LLC, not a partner. The way the contract was structured was that I, and others, loaned the LLC money and we were supposed to see a fixed return on investment. In my case 20%. I however, got no return, and no principal back. So, in essence, lost 100% of the investment.No Tag