Investors & landlords

Just as a general proposition, passive losses cannot be used to offset capital gains with the exception of the $25,000 special allowance (if you do not exceed the income thresholds).

 

Specifically, if you sold a rental property to an unrelated third party in a fully taxable transaction in 2019 at a loss, that loss might have created a net operating loss (NOL), but you would not have a passive activity loss carryover as a result of the sale.

 

You should use the worksheet at the IRS web site (link  below) to determine if you have an NOL and the amount.'

 

https://www.irs.gov/publications/p536#en_US_2019_publink1000177330