The sale of the decedent 's personal residence may result in: A short-term loss. A loss that is not allocated to principal, therefore not limited to $3000. A loss caused by the expenses of the sale when these expenses are jot deducted on Form 706 as an administrative expense. A loss that is deducted on the estate's Form 1041, without any consideration to what the beneficiaries actually do with the property after the decedent's death.