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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
March 27, 2021
7:03 AM