Can I Claim a Loss If I Sold My Investment Property for a Loss?

Yes — but the rules depend on what type of property it is. If you sold a rental property at a loss, you likely have a Section 1231 loss, which is treated as an ordinary loss — fully deductible against any income — as long as you've had a net Section 1231 gain in the prior 5 years (the "lookback rule"). If not, the loss is still fully deductible as an ordinary loss. Capital property held purely for investment (not rental) generates a capital loss, deductible against capital gains and up to $3,000 of ordinary income. Your basis (purchase price plus improvements) is key to calculating the gain or loss — keep all improvement receipts throughout your ownership.