entry of Passive loss carryover on sale of vacant rental in TT

[cindyhollister]

I sold a vacant rental property the first week of January. When I told TT that I had rented it 0 days, it told me to delete it from schedule E and enter it via Sales of Business or Rental Property. Where do I enter my remaining passive loss on the property so that I can now realize it?

[DianeW777]

The passive loss must be entered as follows to capture the remaining amount.

Passive Activity Loss Entry:

Assuming your passive losses were carried over each year, this will be a separate and identifiable entry which will carry to the Schedule E.  The full remainder of passive loss carryover is used in the year of sale as an expense. This is combined with your overall rental gain or loss to your Form 1040. 

• If you did delete your rental activity, then you must create a rental (Schedule E) to enter your passive loss. It's not necessary to enter every asset again if you did remove them. 
• When you are on the screen 'Do any of these situations apply to this property?' (Property Profile section), be sure to check the box under Carryovers. 

If they are deleted and you are using Sale of Business Property be sure to separate the land from the building because there is more favorable tax treatment for the land portion of the sale.

Sale of Business Property:

1. Income and Expenses at the top
2. Scroll down to Other Business Situations
   • For TurboTax Desktop: Business Income and Expenses > Less Common Business Situations
3. Select Sale of Business Property
4. Select Sales of business or rental property that you haven't already reported.
5. Answer 'Yes' to Do all of the following apply...?
6. Enter your sales information:
   1. Description of the Property (Machine Type)
   2. Sales Price/Sales Expenses 
   3. Date acquired and date sold
   4. Cost
   5. Depreciation