How to I keep track of passive income loss for a property we no longer rent?

[chuckcobb]

We have owned a rental property house for about 10-12 years and over that period of time we have built up a fairly significant passive loss carryover.  We are now using the house for our own use and have not rented it at all in 2016.

We have no passive income to offset the passive loss carryover at this time so we won't be able to use this passive loss until we actually sell the house which probably won't happen for at least a year or two.

My question is how do I track this passive loss in TurboTax so that I don't lose it?  I thought that one way might be to continue to file a Schedule E for 2016 and report zero days of rent but TurboTax declares that as an error if I try to do that.  If I remove the Schedule E altogether from my return, I am concerned that I will lose the passive loss in future years.

[maxwellh]

Hey ChuckCobb - so how are you keeping track of this?  Does Turbo Tax not do it?  Are you just going to get the Form 8582 from your previous 10-12 tax returns?

[chuckcobb]

Yes, unfortunately that appears to be the only way to do it.

[view2 · Accepted solution]

Passive activity losses are calculated on Form 8582. Print all of the worksheets for your records ,you will need the accumulated depreciation also.

[chuckcobb]

Thanks for your response; however, I haven't been able to figure out how to implement that in TurboTax.  When I delete Schedule E from the return, it wipes out the information associated with that rental on the 8582.  How do I preserve the information on the 8582 and get rid of Schedule E?

[view2]

At the property asset summary screen for your property; click edit  to the right of asset

You will review certain prior data .

At the screen 'Tell Us About This Rental Asset' [two screen for this information]

This is purchase price and land value  and date purchased.

Then on the next screen after those entries continue

mark you sold

"This item was sold,retired,stolen ,destroyed,disposed of,converted to personal use,traded in ,or given away (or it is no longer used in this business for some other reason)

Then enter date /retired from use.

continue on out

IN the desk top version click the form radio button upper right.

When the forms open  look in the left panel,scroll  to the Form 8582, you have the option to print only one form in this mode when that form is opened in the larger panel..

Line 14 of the schedule E quickzoom the asset life history and print that form [amortization schedule will open] Record for data and depreciation .

Hope this helps.

[chuckcobb]

Thanks for your response; however, I'm having difficulty following your instructions:

1.  I don't know where to find the "Property Asset Summary Screen" that you mentioned.  I have TurboTax Premier for Windows desktop and I don't see that anywhere

2.  On Schedule E, line 14 is "Repairs" and I don't see a way to quickzoom to the asset life history

Can you please clarify that?

Thanks,

[view2]

Added two images that may help.{ the line 14 is on the Asset worksheet , sorry old age creeps in at times, LOL}

The major screen page headings to enter rental property information.The path is:

1.federal taxes/ wages & income/ select specific topics/ rental and royalties/ /view list(then )

I'll chose what I Work on.

your rental summary

Property Profile

Rental income

Expenses

Assets <---------<<<<< here click update or start

Vehicle Expenses

[chuckcobb]

I'm still having difficulty matching your descriptions to what I see in TurboTax.  I have the Premier edition.  I noticed in the images that you shared that they are from the "Home and Office" edition.  Perhaps that is the difference.

I have figured out what I need to do to convert this rental property to personal use.  In the step-by-step questions, there is a question about that.  When I answer that question that I did convert it to personal use and I answer another question that I didn't try to rent it at all in 2016, it removes Schedule E from the return altogether and the effect of that is to erase any passive loss carryovers from the form 8582 so I will lose that information when I sell the house in a future year.

It would be nice if there was a way to preserve that information in TurboTax so that it would be carried over in future years until I sell the house but it sounds like that there is no way to do that and I need to manually preserve the information and re-enter it into TurboTax at the time I sell the house.  Is that correct?

I have printed out a copy of the depreciation history.  What else do I need to preserve in order to re-enter this into TurboTax in a future year that I sell the house?

PS  This seems like a very cumbersome way to have to recreate all this information in a future year that I might sell the house.  It would be nice if TurboTax had a way to preserve this information even though it may not be reported to the IRS.

[view2]

this is the path for Premier, my answer reflects the different in version.

federal taxes/ wages & income/ select specific topics/ rental and royalties/ /view list(then )

Select  " I'll chose what I Work on" on the screen  when that is given.

[Speer]

This makes no sense - I have h&O and the same prob - I’m not renting my house anymore - but if I change asset status sch e goes away and all carryover passive losses - is there not a way to transfer those carryover losses somewhere else - HELP

[Carl]

If you select the option for "I did not rent or attempt to rent this property in 2019" then the SCH E and EVERY BIT OF HISTORY on that rental property will be deleted permanently and forever. Period. End of Story. In the end, this is *EXACTLY* what you want  *******IF******* *AND* *ONLY* *IF* you converted the property to personal use on your 2018 tax return. (If you did that correctly and completely, then the SCH E data for that specific property should not have imported into your 2019 return in the first place.)

On the tax return of the year you converted the property to personal use, you need to print out several documents and keep those documents ***FOREVER***. You will need them when one of three things happens in your live.

1) You convert the property back to a rental or *any* *other* business use.

2) You sell the property.

3) You die.

First, your need the two IRS Form 4562's for that specific property. These forms show your depreication on the property. Both forms print in landscape format. The first one is titled "Depreciation and Amortization Report" and the 2nd one is "Alternative Minimum Tax Depreciation".

Next, you need to print the IRS Form 8582.  That form is 3 pages, but if the last page is not used then only the first two pages will print. Your carry over losses are on worksheet 5, column c.

If in the future you convert this property back to a rental, be aware that the TurboTax program can *not* handle that situation cleanly. You will have to do some finagling with the in service dates in order to get the program to pick up *correctly* where it left off. Otherwise, that future tax return *will* *be* *wrong*.  Now TurboTax may fix this problem is the future. But I doubt it since it's been around for the 15 plus years I've been using the program.

[Speer]

So what you’re saying - since I discontinued renting beginning 1/1/2019 all the passive losses from 2018 appear nowhere - and are only relevant when I die or sell etc.  So in the interim I can’t offset passive rental income from other activities by the loss carryover of 2018.  Seems like 2018 schedule E losses should transfer to 8582 worksheet 3 column C - since there is no Schedule E in 2019 to carry them???