Convert rental to primary and to rental; at-risk vs passive

[bradevan]

I have 2 questions.

1) I have rental property which I converted to primary in 2020 and converted back to rental in 2023. I have suspended passive loss from 2020 and prior but I realized this passive loss were not carry forward in my tax form from 2021-2022 (cause we didn't have rental then). This rental property record is also missing in my "Business" section. I believe since the past tax income is not impacted, I just need to re-create the rental property entry in order to continue the depreciation, and to carry forward the suspended loss. Is that right?

2) We own the rental property 100% and in my past years' schedule E, I can see that the at-risk status is "ALL" and passive status is "Active RE". However, why is it that passive loss is populated but at risk disallowed loss is blank? I would assume that both passive and at-risk loss should have been populated as our investment money is at risk.

If at-risk should be populated, should I just create entry to create Section 179 carryover so that I can realize the at-risk loss for 2023?

[MarilynG1]

Yes, you need to go back to the year you converted your Rental to Personal to see the amount of Depreciation Taken (Form 4562, landscape).

You can add your Rental Property asset back, with a Cost Basis of your original Cost Basis, less Depreciation Taken, unless you have added Improvements to increase the basis while you were living there.

Yes, you can report your Carryover Passive Activity Loss amount in the Rental section.

You don't want 'at risk disallowed' to have an amount; that would mean that part of your at-risk loss is disallowed. 

Your carryover loss from 2020 may or may not be  able to be used in 2023.  If not, your 2023 loss will be added to the amount and continue to carry over, until able to be used or property is sold.

Unclear as to what you are referring to as '179 Carryover loss'.  This would apply to a Rental Asset (not the house).  If you had one in 2020, you can enter it, but you don't want to create one. 

Here's detailed info on At-Risk Limitations you may find helpful, as well as more info on Depreciation of Business Assets. 

[bradevan]

Thanks for the response.

Regarding my at-risk vs passive loss question, I've not been able to realize my passive loss due to the income limit. And since this rental asset qualifies for at-risk loss, shouldn't I see my schedule E populated for both passive and at-risk loss? I'm only seeing passive loss populated which makes me wonder if my past tax forms was not populated correctly.

Sorry, I meant to say "SECTION 465(d) CARRYOVER". That is created by Turbotax to bring back the suspended loss, as it was not available in my last year form.

[DianeW777]

First, A section 465(d) carryover would come from your indication on a previous' year's tax return that your overall loss was not deductible because you were not "at risk".

• Simply put, you are not "at risk" if the money you have used to pay for expenses is not yours to lose (i.e. you have a loan, but don't need to pay it back because nothing secures it). Its possible to not be at risk, but its not common.  If you are fully at risk, you should carryover the full amount of a loss you were unable to use.

For 2023, enter your passive activity loss (PAL) carryover from your 2020 return  (Form 8582, Worksheet 5, Column C), using the steps below.

The following instruction should help you with the location to enter your carryover loss.  You must go into the rental property income section first, then follow the steps to enter your carryover loss.

1. Any passive activity loss (PAL) carryforwards allowed would be listed on your Form 8582, Worksheet 5 or 6, in your 2022 tax return as 'unallowed loss'.  If you have a PAL and it does not seem to be populated in your 2023 tax return you can take the following steps to enter it.
   • Use the magnifying glass to Search (upper right) > Type rentals > Jump to Rentals > Select Edit beside your Rental Activity  > Under Less Common Situations > Review Carryovers, limitations, at risk info, etc. > Continue to enter your passive loss carryover.  See the image below for assistance.

                                      

@bradevan 

[bradevan]

Thanks. I have updated to remove the section 179 rollover loss.

I have added my rental property back to turbotax for 2023 tax form but when i compared with my 2020 tax form (last year of rental before i convert to primary use), i saw that "GIT-DEP – Gross Income Tax Depreciation Adjustment Worksheet" is present in 2020 but not present in 2023. How can i add this back? This is needed to ensure that depreciation is captured for NJ.