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llw
Returning Member

I sold some land in 2018 for a loss. Can I offset sale of rental property gains with this loss? Tried to do in turbotax as test, didn't work?

Gains will probably happen in 2 years.
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3 Replies

I sold some land in 2018 for a loss. Can I offset sale of rental property gains with this loss? Tried to do in turbotax as test, didn't work?


@llw wrote:
Gains will probably happen in 2 years.

I did a test return and it worked. Depending upon the tax rate for unrecaptured Section 1250 gain (up to 25% for prior, accumulated, depreciation deductions), you may see a difference in the rate but the gain should be offset, partially or wholly, by the loss.

 

You should ensure that you entered the land sale transaction as the sale of investment property and not personal use property as no loss is recognized on the sale of the latter.

Carl
Level 15

I sold some land in 2018 for a loss. Can I offset sale of rental property gains with this loss? Tried to do in turbotax as test, didn't work?

 If you reported the sale as a sale of personal property, then be aware that losses on the sale of personal property are never deductible. But if the land was purchased as investment property and you report the sale as such, then your losses are allowed up to a limit (forgot the limit). If the limit is exceeded, then the excess is just carried forward to the next year.

To report the sale of investment property and assuming this is raw land that was "NEVER" used to produce income (by renting it out for example) you should report the sale in the Investments section under the Personal Income tab.

I sold some land in 2018 for a loss. Can I offset sale of rental property gains with this loss? Tried to do in turbotax as test, didn't work?

If the land is investment property, then any loss would be a capital loss.

 

As such, the loss and capital gains (if any) would be netted. If there is a net capital loss, up to $3,000 ($1,500 if married and filing a separate return) can be deducted from other income per tax year, with any balance being carried forward until the loss is used up entirely.

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