Can I carry forward loss for rental properties sales to next few years?

[Woohoo]

When the rental property sold with a huge loss that was owned for more than 8 years, can she chooses the loss amount for 2016 and carries forward and spreading the remaining loss for next few years?

[DS30 · Accepted solution]

It depends. But you will not be able to choose not to use a portion of the loss from the sale of your rental property this year and use is loss next year if you have income to offset this loss in the current tax year.

When it comes to recognizing the loss on the sale of your rental property, this loss will be a Section 1231 loss—which can be a good kind of loss to have. Here’s why.

First, Section 1231 losses can be used to reduce any type of income you may have - salary, bonus, self-employment income, capital gains, you name it.

Second, you may have a net operating loss (NOL) if the Section 1231 loss is large enough to reduce your other income below zero. If so, you can carry back the NOL for at least two years and use it to offset taxable income in those years. In doing so, you can recover some or all of the taxes you paid in those previous years by amending those returns.

If any of the NOL is left over after going back two years, you can carry the rest forward into future tax years to offset future income (for up to 20 years). Alternatively, you can choose to not to carry it back and just carry it forward for 20 years

Click this link for more information : https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Selling-Rental-Real-Estate-at-a-Loss/...

[edited 2/12/2017]

[TaxGuyBill]

A sale of a rental property is not limited.  The loss is reported on Form 4797 and is allowed in full.  It is not limited to a $3000 loss.

However, as Dee said, you can not choose what you take.  You must take all that is allowed.  Sorry.

[Woohoo]

In case NOL does reduce all incomes below zero for 2016 and she did not want to amend to carry it back, will Turbo tax remember the leftover amount (say -10K) and carry forward to 2017 tax return?

[TaxGuyBill]

I don't THINK so.  I think you need to manually enter it on the 2017 tax return.

[DS30]

TaxGuyBill is correct. The TurboTax system will not carry forward any individual NOL and this information needs to be calculated and entered manually each year. Here is an IRS reference link for calculating your NOL : <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p536/ar02.html">https://www.irs.gov/publications/p536/ar02.html</a>

[Seltzer]

On what form number and which line is a section 1231 NOL entered?  if it is derived from a worksheet, please tell me worksheet name.

[Mochashello]

This is a helpful thread but I still have a couple questions...If the loss was reported on 4797 as an ordinary loss in 2017 and it wasn't used up, where do you report the remaining amount in 2019? (2018 had no income.) What form and what supporting documentation for the remaining loss? 

Is it different if it is an individual vs a Trust (final year)? Do I distribute the remaining loss from a 4797 on a K-1 box 6?

2017 had a loss on 4797 as well as a loss on schedule E (rental property with negative income AND sold for a loss, in service less than 1 year.)

TIA

[KrisD15]

To enter the loss, type   nol carryforward   into the search box and then click the "Jump to nol carryforward" link

Documentation you would keep would be copies of the previous years' tax files where the losses occurred.

The loss is taken on the final return, but any loss that is left over does not transfer, it is lost forever. 

The short term loss is also claimed on the final return but may be limited.