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Maverick67
Returning Member

Sale of Investment Property at Loss

I sold a commercial property at a loss in 2019. After using the loss to offset gains, there was still 78kremaining. Can I use this remaining balance to offset income/gains in 2020 or do is that capital loss only offset against the sale of the property in the year it was sold?

Thank you

9 Replies
ToddL99
Expert Alumni

Sale of Investment Property at Loss

If you had unused capital losses in 2019, you can carry them over to subsequent tax years to offset capital gains (or, with limitations, ordinary income).

 

See What is a capital loss carryover? for an explanation of the capital loss carry-over process and links on how to enter them in your return. If you used TurboTax in 2019, unused losses would automatically carryover to your 2020 return.

tagteam
Level 15

Sale of Investment Property at Loss

@Maverick67 Was this property used for rental purposes? 

Maverick67
Returning Member

Sale of Investment Property at Loss

Yes. It was a commercial bar, rented for 20 years

tagteam
Level 15

Sale of Investment Property at Loss

@Maverick67 

 

Were you taking depreciation deductions each year?

 

It would be somewhat unusual for rental real estate to show a loss from a sale after having been owned and depreciated for 20 years since depreciation deductions reduce your basis in the property.

Maverick67
Returning Member

Sale of Investment Property at Loss

Thank you. I was thinking it should carry forward too, but it isnt. The deduction shows on 2019's form 4797 as a 78k loss. This was then applied to the 1040 line 7a giving me negative income in 2019. 

Turbotax asks about nonrecaptured 1231 loses and when I fill in the carryover, it says it doesn't apply to anything.

Am I missing something?

Maverick67
Returning Member

Sale of Investment Property at Loss

There was a freak storm that collapsed the roof. The building was condemned and sold basically for the real estate. It netted in a loss. It looks like the loss was all applied to 2019 returns, netting me negative income. I have read confusing information on if the remaining loss (the negative income part) is able to be carried over to 2020.

tagteam
Level 15

Sale of Investment Property at Loss


@Maverick67 wrote:

This was then applied to the 1040 line 7a giving me negative income in 2019...Am I missing something?


Yes. The sale of business property (here property held for rental use) can generate a net operating loss (NOL) if the property is actually sold at a loss.

 

You should determine whether or not you had an NOL for 2019 (note that TurboTax does not support the calculation of an NOL).

 

See https://www.irs.gov/publications/p536#en_US_2020_publink1000177318

Maverick67
Returning Member

Sale of Investment Property at Loss

Thanks Champ!

I used the link you sent to calculate the NOL. Is there some way to enter this figure in turbotax? 

tagteam
Level 15

Sale of Investment Property at Loss

@Maverick67 

 

You would enter the NOL in the Less Common Business Situations section (click the Start or Update button to the right of Net Operating Loss/QBI Carryforward Loss).

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