Passive Loss Carryover

[shubhron]

Passive Loss Carryover
I created an LLC in 2019 and transferred my rental properties to the LLC. I have Passive Loss carryover in my personal return ( FORM 8582) that I incurred from the rental properties. How can I transfer this to the LLC in the Business return?

[AnnetteB6]

Since the losses were accumulated on a personal level, you should not transfer them.  Let them remain on your personal return until which time you sell the property.  In order to do so, you will probably need to continue to carry an 'empty' Schedule E on your personal return.  

[Carl]

I created an LLC in 2019 and transferred my rental properties to the LLC

If this is a single member LLC then nothing changes at all on your personal tax return. Residential Rental Real Estate is reported on your personal tax return *no* *matter* *what*. So if rental property is the only thing your single member LLC owns, then you won't be filing a SCH C at all.

If this is a multi-member LLC, then you will never be deleting the SCH E from your personal return anyway.  The multi-member LLC will issue each owner a K-1 showing their share of passive activity, and all data from that K-1 concerning the rental income/expenses will be on page 2 of the SCH E of your personal 1040 tax return.

On the personal side, (1040) you'll show that the property was "removed for personal use". Then on the 1065 your business start date will be the same exact date your very first rental property became "available for rent", even if that start date was years ago.  It's going to be tricky because you have to be careful that you don't double-dip on your expenses across your personal return and the 1065 return. Additionally, with a partnership you will retain 100% of all depreciation taken prior to the parntership start date, while all depreciation taken after the start date will be split proportinal to ownership among all members of that partnership.