If I have interest income of around 7500 and a real estate rental loss (first year) of about 4000. Can I take an NOL? If yes, then how much?? No other income. Thanks!

[rentaltax2018]

the only other income is limited amount from social security. Right now I am including  Schedule A -NOL calculations and a note electing to carry forward to next year??

[pk · Accepted solution]

Unless you are in the business of realestate rental i.e. an active income, you can take passive loss , up to 25,000 loss shown as ordinary income loss.  If you tell TurboTax that you have rental income, answer all the  questions , it will fill out the schedule-E and transfer the allowable passive loss to your  form 1040.

Does that answer your question or do you need more help?

[rentaltax2018]

I’d like to know how to calculate the loss.  Your answer just tells me to will do it.  I want to know how it works s!

[pk]

When you go to schedule-E , it asks for the gross rental income, all the expenses  such as  property taxes, mortgage interests paid, repair costs, maintenance costs , legal fees etc. etc.  It will also ask  cost basis of the property ( which is acquisition cost plus cost of all improvements till date  ) and  cost of land included in the  basis and the date first put out for rent. It will then compute the allowable depreciation and include that as an expense.  This will generate a net profit ( taxable as ordinary income  ) or a loss ( which will be transferred to form 1040 subject to Passive Loss Limitation  and anything above that as suspended losses for the next year ). Does that help?

[rentaltax2018]

Thank you.  Yes, I have done all that.  I had a loss of $4000 for 2018 for rental.  I had interest income of $6000.  I had a net gain of $2000 before my standard deduction of $13600.  My only other income was small amount of non taxed social security.  I filled out Schedule A form 1045 and believe I have an NOL of $4000.  If this is correct, since it is no longer possible to carryback NOL from 2018 do I need to include the calculations and a note electing to carry it forward?  I am planning to submit by mail.  Did I do it correctly?  Do I need to do anything to carry it forward or will it automatically be carried forward to next year.  Thanks,

[rentaltax2018]

the passive loss goes on lines 6 of 1040?