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choya
New Member

short term gain on sale of rental

I bought and sold a commercial rental in 2021, and made substantial short term gains. I also had substantial short term losses in the stock market. Can the rental property gains be offset by the losses, and how is this done on turbotax. When I dispose of the property through turbotax, it does not offset the gain from the loss.

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Accepted Solutions
tagteam
Level 15

short term gain on sale of rental

Your stock market losses are treated as short-term capital losses.

 

Your gain on the sale of the rental property is treated as ordinary income since you held the property for one year or less.

 

As a result, there is no direct, one-for-one, offset (as there would be if both received capital gain treatment). You can only use up to $3,000 ($1,500 if married filing separately) of the stock market losses against all other income.

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2 Replies
tagteam
Level 15

short term gain on sale of rental

Your stock market losses are treated as short-term capital losses.

 

Your gain on the sale of the rental property is treated as ordinary income since you held the property for one year or less.

 

As a result, there is no direct, one-for-one, offset (as there would be if both received capital gain treatment). You can only use up to $3,000 ($1,500 if married filing separately) of the stock market losses against all other income.

Mike9241
Level 15

short term gain on sale of rental

sorry, but holding the property for less than 1-year results in ordinary income, not short-term capital gain. you should see the gain in section II of form 4797. that is transferred to schedule 1 line 4

you can see form 4797 instructions. look at the table line 2 on page 1

IRC section 1231 doesn't apply because the property was held for less than 1 year. 

Https://www.irs.gov/pub/irs-pdf/i4797.pdf 

 

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