How to keep carryover loss for rental properties that have changed owners?

[hongtaol]

I have a few rental properties that have carryover loss from previous years. From this year, I am not going to report these rental properties on my Schedule E because of the ownership change. I would like to know if there's a way to keep the carryover loss from these rental properties after I delete the individual Schedule E.  Also, if I start to report them again in a few years, is there a way to add back the carryover loss from the previous years? 

[Critter-3]

What do you mean "ownership change "?  Did you sell them ?  Gift them ?  Transfer to a grantor trust ? 

[hongtaol]

Gift them 

[Rick19744 · Accepted solution]

You need to get some professional advice here.

There are a number of issues in regards to your transaction:

• Did you consult with an attorney and properly transfer title?
• You most likely have a gift tax return to file
• If you have suspended passive activity losses, those losses will get added to the basis of the property.
• You can't just flip flop between who is going to be reporting the activity.  There needs to be an actual legal transfer.
• Consult a professional ASAP before you have tax consequences that are unfavorable to you.

[hongtaol]

Thank you!

Here's the situation. I co-own the properties with another owner. We used to report 50% each on Schedule E.  From this year on, I will not report but he will take 100% of the reporting. Only for reporting tax purpose. Do we need any process? How can I add the carryover loss to the cost basis of the property?

[Mike9241]

so we can possibly give better advice, we need to know the method by which ownership changed.  change one way and your carryover losses would permanently be lost. change a different way and they are recognized in the year of change.  consultation with a lawyer is certainly advisable so you can accomplish your goal and hopefully minimize adverse tax consequences. 

[Critter-3]

Seek local professional assistance for this issue especially if you never set up a partnership return.  If you are not getting out of the ownership completely by gifting the property then not claiming the income/expenses/depreciation on your return may not be legal.  A tax attorney may be needed. 

[hongtaol]

Can you elaborate on  "change a different way and they are recognized in the year of change"? How to do this? 

Also, if we just change the ownership from 50/50 to 10/90, will still be an issue?

[Critter-3]

Please seek local assistance from someone you can talk to face to face  and not rely on nameless faceless users on this public forum.  You need real time help from a qualified  live person.