If I had rental income in 3 months and sold the property for a loss how much of the loss can I deduct? (Total loss is 23K against only $1050 in rental income)

[SweetieJean]

Did you actually sell at a loss? Don't include any mortgage payoff in the calculation.

[annat9612]

Yes the purchase price was 62k sold for 31k

[mfairchild066]

I received income from the rental for 3 months. Sold in the 4th month and sold for loss of 23K.  TT is deducting the entire loss against the $1050 instead of limiting it to the $3000 I thought I had to do.  Confusing.

[TaxGuyBill]

Was it always a rental since you owned it, or was it originally your personal-use property and then you later converted it to a rental?

[mfairchild066]

Aleays a rental, never converted

[mfairchild066]

Always*

[TaxGuyBill · Accepted solution]

TurboTax is doing it correctly.  The full amount of loss is allowed, and is not limited to $3000 a year.

[mfairchild066]

So the difference (21k) can offset my nonpassive wage income? Sorry so many questions. Just seems like a huge wage reduction resulting in a huge refund.  Dont have anymore properties so this wont happen again, just dont want to get wammied 5 years down the road! Thanks for all your help!

[TaxGuyBill]

Yes (assuming it wasn't sold to a related party at less than Fair Market Value), the loss can offset any other income.

[mfairchild066]

Thats awesome then. Yay for refunds! Lol Thanks Bill!