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Last year, I read everywhere online that if you have capital gains on a house, you can offset it on your taxes with capital losses on stocks. Well, we recently sold a house on a loss, and made a lot of money on stocks. We thought that the reverse was true, that we could offset the capital losses on the house with capital gains on stocks. We asked a professional who also said we could.

However, now that we are filling out our taxes, it appears that it isn't true. Our idea only works if the real estate in question is not where you live, but just owned. So now, we are 40k in the hole on our taxes. Is there anything we can do to ease the damage?

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    Losses on one's primary residence are not deductible, period. If you made a lot of capital gains ($40K in capital gains taxes suggests capital gains on the order of $200K), then you are in the vicinity of the range of income where you will be hit by Net Investment Income Tax of 3.8% also. So, no easy answers, just adding to the pain... – Dilip Sarwate Feb 18 '17 at 20:46
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I'm very sorry to hear this. Did you ask the professional to put his advice in writing? At the very least, you can get him reprimanded or even have to make good on what his advice cost you. Professionals like him give bloggers like me a bad rap.

In the end, a loss from sale of your home cannot offset any other gains. The gain from your home sale is often not taxable as up to $250k per person (for a couple) is excluded if you lived in the house for two of prior five years.

By the way, where, exactly, did you read this? 'Everywhere' is pretty broad. I've been around for some time and never saw this particular incorrect assertion before.

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