Rental Property

[mm6185]

Changed condo classification to not renting for profit as family member living there was unemployed and unable to pay rent. How do I remove $25,000 loss carryover from 2018?

[ColeenD3]

How did you change it? Did you skip the rental section and enter the income as other income? Did you just not do anything with the property at all?

You don't need to delete Form 8582 that calculates your passive loss. That loss will help you when you sell the property. It does not expire.

[mm6185]

There was no income this year as he was unemployed.   Condo rent charged, if paid, is below fair market value.  Previously said the rent was fair market value for area.   The -25,000 shows up on line 7a.   Are you indicating that it is not a problem and leave the -25,000 as it is on 7a.

Did not enter as other income.   Did enter rental as not fair market value.

[Carl]

How do I remove $25,000 loss carryover from 2018?

Here's the bottom line. If you remove your carry over, then you lose it, permanently and forever. Note also that if you changed to renting at below FMRV, then carry overs are not allowed and any prior carry overs are also lost permanently and forever.

Since you are not collecting rent, you would be better off converting the property to personal use. That way, your carry over's stay intact for future use when one of three things happens in your life.

 - You convert the property back to rental (Be forewarned, the TTX program does not handle this correctly,)

 - You sell the property

 - You die.

[mm6185]

How does one convert the condo to personal use.?

[ColeenD3]

If you made no income whatsoever in 2019 from the property, then it qualifies as your second home. Just remove it from the rental section. Keep your Form 8582 for the future.

You can deduct the mortgage interest and property taxes on your second home on Schedule A, within limits.

[mm6185]

Where do I enter information to change rental condo to personal use?  Can I claim condo real estate taxes on Schedule A?

[ColeenD3]

There is no form or entry to make. Just cease filing Schedule E. Include the expenses mentioned on Schedule A.

@mm6185