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posted Jul 8, 2020 11:10:42 PM

I did a 1031 exchange of a rental property. I have passive losses against this property. How do I use this up against my current rental properties?

I did a 1031 exchange of a rental property. I have $--,000 passive losses against this property. How do I use this up Unallowed loss (from Form 8582) against my current rental properties income?  I don't own this property anymore, so I don't list it on Schedule E.  

 

Where do I show this passive loss, and make sure it is used against this year's rental income?

 

 

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1 Best answer
Level 15
Jul 8, 2020 11:22:47 PM

Suspended passive losses are released upon the disposition of the property to an unrelated third party in a fully taxable transaction (a 1031 exchange is clearly not a fully taxable transaction).

2 Replies
Level 15
Jul 8, 2020 11:22:47 PM

Suspended passive losses are released upon the disposition of the property to an unrelated third party in a fully taxable transaction (a 1031 exchange is clearly not a fully taxable transaction).

Not applicable
Jul 8, 2020 11:37:11 PM

if you did the 1031 in 2019 the passive losses from the property should offset the passive income from other properties. you should see this on form 8582  the income properties will be on 1a and the loss properties will be on 1b.  since you did not dispose of the property in a taxable transaction the amount of losses that can be used will be limited to the income + any special allowance you entitled to in Part II

 

if the 1031 was in 2018, you may need to enter that loss carryover in the passive limits section of the schedule e worksheet for the replacement property.