Thank you, this is very helpful. So help me understand:
https://turbotax.intuit.com/tax-tips/rental-property/selling-rental-real-estate-at-a-loss/L2RKgClm4
Based on this article, and what I clipped below:
I have as of now $17k of passive activity losses (PALs). I could only deduct those with passive income if I had any after the sale. But in my case, if I sell at a loss of $30k (is this now a Section 1231 sale?), this does not constitute a passive loss but it can be applied towards the rental income that I may receive in 2024. Did I get this right? But the passive losses will still be carried through the years until we use them all?
"Deducting passive activity losses
If your rental property has generated losses in past years, you might have suspended passive activity losses (PALs). You can generally deduct these passive losses only against passive income, which can be from other activities such as rentals or other passive business activities.
Fortunately, you can also deduct suspended PALs when you sell the property that generated them. If you sell a rental property with suspended PALs, you may be able to deduct them on top of deducting any Section 1231 loss from the sale. Like Section 1231 losses, deductible PALs can offset other income and also create or increase an NOL that you can carry backward or forward."
