I own a single rental property (only passive activity) that has accumulated a PAL over the last several years and was sold at a loss for tax purposes. Property was fully sold, to an unrelated party, etc. As such, I believe that this PAL can be used to offset ordinary income.
1. Is this a true assumption?
2. If I were tell sell equity investments for capital gains in the same year, would the PAL first apply to capital gains (lower tax rate) and then to ordinary income? In other words, should I wait to sell stocks at a gain to ensure the PAL offset is to ordinary income?
