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tlcurtis2
New Member

Can I net my rental losses for all properties & apply to the gain on sale of 1? I have 3 rentals with losses being carried forward. I sold 1 this year at a gain.

 
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tagteam
Level 15

Can I net my rental losses for all properties & apply to the gain on sale of 1? I have 3 rentals with losses being carried forward. I sold 1 this year at a gain.

"Can I net my rental losses for all properties & apply to the gain on sale of 1?"

 

Not really, because your rental losses are considered passive losses which can only be directly offset by passive income. The sale of your one rental property produced capital gain as well as, most likely, unrecaptured Section 1250 gain (depreciation recapture). 

 

Note that there is a special allowance, that can be deducted from nonpassive income, of up to $25,000 (subject to phaseout) of loss from a passive rental real estate activity if you actively participated in the rental activity.

 

https://www.irs.gov/publications/p925#en_US_2018_publink1000104571

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tagteam
Level 15

Can I net my rental losses for all properties & apply to the gain on sale of 1? I have 3 rentals with losses being carried forward. I sold 1 this year at a gain.

"Can I net my rental losses for all properties & apply to the gain on sale of 1?"

 

Not really, because your rental losses are considered passive losses which can only be directly offset by passive income. The sale of your one rental property produced capital gain as well as, most likely, unrecaptured Section 1250 gain (depreciation recapture). 

 

Note that there is a special allowance, that can be deducted from nonpassive income, of up to $25,000 (subject to phaseout) of loss from a passive rental real estate activity if you actively participated in the rental activity.

 

https://www.irs.gov/publications/p925#en_US_2018_publink1000104571

View solution in original post

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