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I would think that the position would be:
This was not her first choice property but once she was locked into the purchase contract for #2 and her preferred #1 property became available again she bid on #1 again and purchased #1.
(Closing for #2 was about 10 days before #1)
She also had a commitment to purchase #2, but she never intended to move into #2, once she had #1 locked in again. Evidence of this is that she put #2 on the market again the same day that she closed on #2 and never moved in.
She also inquired about renting it out, but the potential rent would not nearly cover the monthly cost and renting it out might also be a burden in the event of a quick sale.
So, would it not follow, that this was a BAD INVESTMENT and the loss is deductible against any future capital gains or @ $3,000 p.a.?

Investment losses on intangible assets (stocks, bonds, etc.) and certain well defined classes of tangible assets (collectibles, precious metals, etc.) are deductible. Otherwise, losses on personal use property are nondeductible.

Had she actually rented the property (perhaps even if she made a bona fide attempt to rent it), she might have been able to deduct the loss. But, in the absence of clear evidence that this property was used for business or rental purposes, there's no deduction.

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