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Investors & landlords
It sounds like the program is working as if this is a normal rental house. Usually a rental house stands on its own and claims only the suspended losses associated with that house. There are exceptions.
If this is a normal rental house, you only claim the losses for that house. Passive losses from other rental houses do not go on the sale of another house. The IRS requires separate books for each house unless you meet one of the exceptions - which you don't mention.
The most common exception would be to have them grouped. If you had all of the houses grouped, then the group would sustain the income and loss. We can't see your return to know how you have been claiming your houses or what you have done. Selling one house out of a group is difficult and requires a lot of effort.
Reference:
- Instructions for Form 8582, Passive Activity Loss Limitations
- Topic no. 425, Passive activities – Losses and credits
- Publication 925, Passive Activity and At-Risk Rules.
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