@Anonymous_ wrote:
@Opus 17 wrote:
And, even if you qualify for the special $25,000 loss, you may want to capitalize the remainder of your repair expenses so you eventually benefit from them.
I suppose I should have mentioned that any unused (disallowed) losses from the rental activity will be carried forward to the following tax year (and subsequent tax years if the losses remain suspended).
The suspended passive activity losses (PALs) will ultimately be released upon a sale to an unrelated third party in a fully taxable transaction.
Thanks. This is admittedly not my usual area of taxes and your use of the word "disallowed" instead of "suspended" sent me down the wrong path. Still, there might be advantages to capitalizing the costs rather than suspending them, depending on how long the taxpayers plan to own the property and use it as a rental, and depending on other rental income and expenses. An accountant may still be of benefit.
