Can I write off earnest money I lost when trying to purchase a home?

If you lost earnest money due to a failed personal home purchase, you cannot claim the loss on your return. 

If you lost earnest money due to a failed business purchase of a rental home, you may claim the loss. The loss would be considered a capital loss you would write off on your Schedule D. 

In the program, go to: 

1. Federal Section
2. Capital Gains and Losses
3. Capital Gains and Loss Items

• For 'Date Acquired', enter the date the money was placed in escrow.
• For 'Date Sold', select the Alternate Option and choose "Worthless".
• You will choose "Worthless Short Term" if the money was in escrow for less than 1 year.
• You will choose "Worthless Long Term" if the money was in escrow for 1 year or more.
• The cost would be the amount of earnest money you put down on the property.
• The sales price would be $0.
• You did not receive a 1099-B will be the cost basis type.