Hundreds of thousands of Americans have a mortgage greater than their house is worth. When those homeowners sell, they are forced into foreclosure, short sales or sell for less than they owe. If they sell for less than they owe, they must pay for the difference in the sales price and the mortgage. This loss is not tax deductible.
It is predatory for the United States to charge a Capital Gain tax on any housing that is sold for more than purchased, but not allow a Capital Loss deduction when the reverse occurs. There should be special consideration given to those Americans that did not foreclosure or short sell their houses, but rather paid the cash difference in price for sales less than their mortgages. This cash loss should be tax deductible, if not for the entire loss on the sale.