When Appraisal Fees Are Deductable

[Ryan Rudloff]

Hi, I’m in a position where I’m considering a cash-flowing industrial property as an owner occupied investment.

The owner wants a portion of the earnest money deemed non-refundable. ($15k)

My question is as follows:

If the appraisal comes in well below the purchase price (I have a contingency included to protect my earnest money from a low appraisal), or if for some reason reason the deal falls through and I lose my portion of the non-refundable earnest deposit, can I write it off as a capital loss?

How about the $10k appraisal fee/environmental report? Can those be classified as capital losses in the event my deal falls through?

If so, this could help me justify the risk when agreeing to non-refundable deposits if the deal does stall for some reason that’s out of my control.

Thanks for any guidance on this..

Ryan