December 2011 Financial Questions & Answers

Q: I drive my car for business and have been deducting my actual expenses (gas, oil, etc.) instead of using the IRS standard mileage rate. I'd like to simplify things and use the standard mileage rate going forward. Is that possible?

A: To use the standard mileage rate, you have to choose it in the first year your car is available for business. So you'll have to keep using the actual expense method until you replace your vehicle. When you elect the standard mileage rate in the first year, you're not locked into it, assuming you own the car. You can also use the standard mileage rate for a leased vehicle, but it must be used for the entire lease period.

Q: My wife and I have our home on the market and anticipate selling it at a loss. Will we be able to deduct the loss for tax purposes?

A: Unfortunately, you cannot deduct a capital loss on the sale of residential property you've used as a personal residence up to the time of the sale.