I own two rental properties which have prior years' passive losses of $15k and $25k, respectively. We sold the first priority at a gain't of $20k (primarily due to the recapture of depreciation). I believe that I can use the $15k in loss carryover to offset the gain. Can I also use a portion of the losses from the second property (which I still own) to further reduce my tax liability to $0?
Also, how would I report any of this in Turbo Tax? I have completed Schedule E for the property sold, noted it's been disposed off, reported the prior years' passive losses carryover, etc....yet the system is still showing the gain at $20k and my refund is being reduced significantly (nearly $4k) so it appears to be taxing the full $20k gain. Any guidance would be much appreciated!
