Tax Year Prior to 2020: Real Estate Investment Loss

[ProStar]

In June 2019 the LLC that I am part of sold real estate that was purchased in 2005 at a significant loss. I'm getting a jump on preparing my Tax return in TurboTax 2019, what is the best way/form to show this loss on my taxes?

[Anonymous_]

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@ProStar wrote:

In June 2019 the LLC that I am part of sold real estate that was purchased in 2005 at a significant loss. I'm getting a jump on preparing my Tax return in TurboTax 2019, what is the best way/form to show this loss on my taxes?

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If the LLC is a multi-member LLC that files a Form 1065, you will have to wait until you receive your K-1.

If the LLC is a single-member LLC (you are the only member and did not make an election to be taxed as a corporation), you can begin to enter the transaction (assuming that part of the program is complete) but the section in which you would enter it would depend upon the manner in which the property was used (e.g., rental, investment). 

[Carl]

the LLC that I am part of

This indicates that you are one owner in a multi-member LLC. Everything needed will be reflected on the K-1 the LLC will issue you. You can't do squat until you have that K-1. For the LLC, their filing deadline is March 15th. So they have until that date to get the K-1 physically in  your hands.

[Rick19744]

Per @Carl  For the LLC, their filing deadline is March 15th. So they have until that date to get the K-1 physically in  your hands.

March 15th is the original due date.  The LLC does have the option to file an extension, which can push that date to September 15th.

[ProStar]

Super Carl, Great feedback, just what I needed. I will reach out to the LLC board for the K-1 form. March 15, I assume you mean March 15 2020? ProStar (also a Carl)

[ProStar]

@Anonymous_ Thanks, I will watch of the K-1 form and get boned up on the From 1065.

[ProStar]

@Rick19744 Wow! Sept 15, don't want that. Good info Thanks.

[gwmullin]

Thank you for the response on an LLC.  My question is on real estate investment property that is unimproved lots and not part of an LLC and is owned by an individual.  Would this be listed on Schedule C?

[DianeC958]

No, if you sold real estate investment property you report the sale in the Investment Section of TurboTax under Stocks, Mutual Funds, Bonds, Other.  When the program asks if you received a 1099-B for sale you answer No.  Then in the list that shows pick Land and report the information for the sale.

[gwmullin]

Diane, thank you.  I will use this next year since one of the properties luckily just sold.  I had another question for costs (labor to clear unimproved land & property taxes only) / deductions since I am not (foolishly) an LLC.  I am listing them on Schedule C as a business expense with the business as property investment and consulting which I also do on the side.  Again thank you for the quick and response.

[DianeC958]

Any expenses that relate to the land, such as clearing expenses and other deductions should be added to the cost of the land to increase your basis in the land. not deducted on Schedule C.

[gravesd13]

How do I claim LOSS on investment sale?

[VictorW9]

You would only be able to claim a loss if you consider this an investment house.

So if you  did not use the house for any personal use, you can claim that this was an investment property and you should be able to claim the loss as a loss on an investment property.

To enter the sale of a capital asset in TurboTax, log into your tax return (for TurboTax Online sign-in, type "investment sales" in the search bar then select "jump to investment sales". TurboTax will guide you in entering this information.

1. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
2. The first screen will ask if you sold any investments during the current tax year (This includes any asset held as an investment property so answer “yes” to this question)
3. Since you did not receive a 1099-B, answer “no” to the 1099-B question
4. Choose type of investment you sold - select everything else
5. Some basic information:
   1. Description –  Usually the address of the property sold
   2. Sales Proceeds – Your net proceeds from the sale (usually reported on 1099-S)
   3. Date Sold – Date you sold the property (on 1099-S)
6. Tell us how you acquired the property - purchased
7. Enter the your cost basis- cost plus capital improvements less any depreciation deducted or allowable as a deduction less any casualty losses take on the property. (Just keep a record of how you figured your cost basis for future reference.)
8. Date acquired - (Just remember that the date acquired should be more than a year before the date sold in order for the sale to get long term capital gains treatment and the lower capital gains rate)
9. If you had a loss, on the question of "Did you use this property for business or investment?" If the property was not used for any personal use, you will answer that this was for investment. Otherwise, you will not be able to deduct the capital loss of a personal use capital asset.