I have carry over losses on my rental property ~ will they ever expire?

[cellis]

Seemed to resolve by entering 0 days rented and 0 days personal use, in stead of checking box "Dis not rent in 2019".

[Esanderson]

You are a lifesaver! Been searching for this all day. Thanks very much. Can I please ask a follow up question...my properties are contained in a LLC so I’ve input the relevant details in the k1/partnership section. Should I also input the same info in the Rental and Royalty section (where I input the carryover losses)? Worried about double counting for the same properties but can’t work out how to input the rental income, expenses etc and carried over losses in the same section. Thanks 

[Esanderson]

You are a lifesaver! Been searching for this all day. Thanks very much. Can I please ask a follow up question...my properties are contained in a LLC so I’ve input the relevant details in the k1/partnership section. Should I also input the same info in the Rental and Royalty section (where I input the carryover losses)? Worried about double counting for the same properties but can’t work out how to input the rental income, expenses etc and carried over losses in the same section. Thanks 

[zjholdings]

I have passive losses that are carry over. My wife qualifies for real estate professional status this year. Will we be able to deduct all the passive losses that were carried over from past year to this tax return? 

[RobertG]

No, you will not be able to deduct all the passive losses that were carried over from past year to this tax return.

Treatment of former passive activities.

A former passive activity is an activity that was a passive activity in any earlier tax year, but isn’t a passive activity in the current tax year. You can deduct a prior year's unallowed loss from the activity up to the amount of your current year net income from the activity. Treat any remaining prior year unallowed loss like you treat any other passive loss.

In addition, any prior year unallowed passive activity credits from a former passive activity offset the allocable part of your current year tax liability. The allocable part of your current year tax liability is that part of this year's tax liability that‘s allocable to the current year net income from the former passive activity. You figure this after you reduce your net income from the activity by any prior year unallowed loss from that activity (but not below zero).

Publication 925, Passive Activity and At-Risk Rules

@zjholdings

[Jasonxuxin]

Hi:

If I have passive activity real estate losses carried over from 2018 ~$40K. 2019 rental net profit is $8,000. 

What is the 2019 rental real estate loss and how is it calculated? Thanks!

[ThomasM125]

You can apply the carry over loss from 2018 to your rental income in 2019 of $9,000, so your income for the current year is -0-. 

If your adjusted gross income is less than $100,000, you can take an additional deduction of $25,000 from the carryover loss from 2018. If your adjusted gross income is over $150,000, you cannot deduct any additional loss in the current period. If you income is between $100,000 and $150,000, you can take a loss of an amount less that $25,000, based on what your income is.

[Jasonxuxin]

Does the deduction make a difference whether it is considered a QBI?

[DavidS127]

No, whether or not there is deduction or loss is not what makes it QBI.  Passive income businesses such as a rental property can be a QBI business if it meets the requirements.  See this link for more information about when a rental property qualifies for the QBI deduction.

When you have a business that qualifies for the Qualified Business Income (QBI) deduction, your deduction is based on the income of the "QBI business".  No QBI business income, no deduction.  And, if you have a loss on your QBI business, that loss gets tracked and "carried forward" to be offset against next year's QBI business income when calculating that next year's QBI deduction.

This is true even if the losses were passive which is the case with your rental losses.  Passive losses for a QBI business (from 2018 forward) will be tracked until the year the loss is included in taxable income.  

The IRS instructions for reporting "Loss Netting and Carryforward" are in the instructions for Form 8995....

@Jasonxuxin 

[Luna1234]

How are the passive losses entered into PTO?

[JohnB5677]

For Rental Property Passive losses

1. Rental Properties & Royalties
2. Continue through screens and select the property
3. Select Property Profile
4. Continue to Do any of these Situations apply to you
5. Scroll down and select the proper carryover

[Kay9]

I also have rental property passive losses for rentals in Hawaii. However, the amounts of the losses are different amounts from Federal as we have income in our home state of Ca. Since there is no income in HI, besides the negative rental amounts every year, we add this to the suspended passive losses which keeps growing each year whereas in Federal some of  it gets used up each year. 

We sold one of the rentals in 2019 and I was trying to figure out how to make HI use the gain on the sale against the passive loss amount for that property. 

I saw your message about using property profile to put in the passive loss amounts. However, as soon as I did that it messed up my federal return because as I said above, the amounts are different in Federal and HI. 

How do I put in the HI suspended passive loss amounts and not have to pay capital gains tax on my sale as it should be covered...???

[Kay9]

This did not work for me because as soon as I put in the passive loss carryover amounts into the property profile, it messed up my federal. This is because my Federal PAL's are different from the HI amounts. Turbo tax premier does not have a good way of handling inputting this info for HI only.

I've also sold one of my HI rentals in 2019 and lots of issues of how to offset it against the PAL carryover as well as how to input the HARPTA refund.

TT needs to be more robust for HI tax filing.  

[autumnanjel]

What happens if you sell to a relative?

[AmeliesUncle]

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@autumnanjel wrote:

What happens if you sell to a relative?

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How are they related?

If it is a close relative, the passive losses are suspended until it is eventually sold to a non-related party.