Rental property depreciation carryover?

Anonymous · ‎June 4, 2019

I owned a rental property and sold it last year. The property operated at a loss every year I owned it. I was not able to take any deductions from the rental property during the years I owned it because my regular income was too high. I did not calculate depreciation of the property during the years I owned it. I sold the property at a loss (even considering depreciation). The suspended losses from this property exceeded last year's regular job income. Will I be able to carry forward any of the losses (such as depreciation) forward to offset next year's income taxes? I don't own any other rental properties. And if I can carry forward those losses, do I need to amend the prior years' tax returns to include depreciation? Thank you.

view2 · ‎June 4, 2019

If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable.

You can amend only three years back.

Even if it was just a mistake, you would treat it as an accounting method change and file a Form 3115 in the current year and take the depreciation as a section 481(a) adjustment.

If your MAGI is over $100,000, your maximum loss available decreases by $.50 for every dollar over $100,00 The maximum loss is completely phased out at $150,000.

Note: When you sell your income property, you can write-off any unused rental losses that have accumulated while you have owned the property.

Suspended and current year losses from a passive activity become deductible in full in the year that you dispose of all interest in the activity...provided it's not sold to a related party.

Rental property depreciation carryover?

Investors & landlords