In 2021 we had a couple1031 and exchanged a few properties ("relinquished") in 2021. The 1031 events were reported in 2021 tax return.
Working on 2022 tax return, I see all the relinquished properties exchanged out in 2021 are listed in Turbo Tax and they have passive activity losses (the check box "I have passive activity real estate losses carried over from a prior year" is checked).
Please help me understand a couple questions regarding the passive activity losses on these "exchanged/sold" properties:
- As they have passive activity losses (and deferred gain from last year's 1031) even though we physically no longer own them, would it mean we need to include these properties in 2022 and future years' tax returns?
- If so do I need to do anything about these properties in TurboTax for 2022 and in the future? My apologies for a naive question, is there any way we can "transfer" the PAL amount to the Replacement properties involved in the same 1031 event?
Thanks,
Lily
