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tedrmartin221973
Returning Member

Passive Loss Carryover from Rental in 2018 converted to Investment in 2019

Need help please!  I acquired a property in March if 2018 and rented at FMV until end of year.  In 2019, I made a lot of improvements and then sold the home in September of 2019 (over a year later).  I had a small amount of passive loss carryover from 2018.  I have tried to enter it as a rental with 0 days rented and also as a sale of business property.  Neither seems to work.  If I do rental, then turbo tax depreciates the property in 2019 and I cannot figure out how to enter my improvements.  If I do sale, then my passive loss carryover disappears and I do not see where I enter 2019 holding costs (mortgage interest, real estate tax, insurance, etc.).  I am stuck and need detailed help.  Thanks in advance!

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Accepted Solutions

Passive Loss Carryover from Rental in 2018 converted to Investment in 2019

Only use the RENTAL section .... enter 0 rental and 0 personal use. 

 

Then enter the improvements made in 2019 as repairs on the Sch E... do NOT enter them as assets in the year of sale. 

 

In the rental info section indicate the property was sold   then when you get to the  asset section follow the screen instructions to enter the sales info.

 

 The passive carryover will be captured on the Sch E ... Switch to the FORMS mode to review the forms and schedules. 

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2 Replies

Passive Loss Carryover from Rental in 2018 converted to Investment in 2019

Only use the RENTAL section .... enter 0 rental and 0 personal use. 

 

Then enter the improvements made in 2019 as repairs on the Sch E... do NOT enter them as assets in the year of sale. 

 

In the rental info section indicate the property was sold   then when you get to the  asset section follow the screen instructions to enter the sales info.

 

 The passive carryover will be captured on the Sch E ... Switch to the FORMS mode to review the forms and schedules. 

Carl
Level 15

Passive Loss Carryover from Rental in 2018 converted to Investment in 2019

In some situations if you enter 0 days rented, the program will *FORCE* you to delete the SCH E. You do that, and you lose "EVERYTHING" on that rental.

Enter 1 day rented, and ZERO DAYS OF PERSONAL USE.

Now you have no rental income in 2019. But you still *MUST* work through the rental income section and enter the digit ZERO for income received. You can't just leave that section blank. (A program fluke I think)

However, you don't need to bother at all with working through the rental expenses section. You *can* leave that section blank with no issues.

Then use the below guidance to report your sale.

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in  2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets.  You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset.  Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2019" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.

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