sold rental property at a loss and sched E line22 has a value, but no form 8582 is being filed by turbotax desktop?

[mrk2]

Hello, If a rental property is sold at a loss in 2025, the loss appears on Sched E line22 which refers to form 8582.  But no form 8582 is in the return.  Is form 8582 not required to support the value on Sched E line 22?  If so, why is it not in the return?

Thanks for your help.

mark

[PatriciaV]

Form 8582 is used to calculate passive activity losses. However, per IRS Instructions for Form 8582 (2025). you don’t have to file Form 8582 if you actively participated in rental real estate activities and you meet all of the following conditions:

1.    Rental real estate activities with active participation were your only passive activities.
2.    You have no prior-year unallowed losses from these (or any other passive) activities.
3.    Your total loss from the rental real estate activities wasn’t more than $25,000 ($12,500 if married filing separately).
4.    If you’re married filing separately, you lived apart from your spouse all year.
5.    You have no current or prior-year unallowed credits from a passive activity.
6.    Your modified adjusted gross income was not more than $100,000 ($50,000 if married filing separately).
7.    You don’t hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or a trust.

If all the above conditions are met, your rental real estate losses are not limited, and you don’t need to complete Form 8582. Enter losses on Schedule E Part I, line 22.

[mrk2]

Thank you for your detailed reply Patricia.  But if all the the conditions you list are not met, form 8582 is required, right?  In this case, all these conditions are not met.

Why is TT-desktop not filling out the form?

Thanks, mark

[AmyC]

Form 8582 is not required when you sell the property because your losses are no longer passive. While you owned the house, passive losses were either limited or not allowed (due to income and amount of loss). When you sell the property, all of those losses are released as ordinary loss rather than passive loss. Selling the house means you no longer have those passive losses and no need to calculate any.

[mrk2]

Thank you Amy.  Very helpful.  How can I see how TurboTax desktop arrived at the number entered on Sched E line22?  This should be a combination of previous years' "passive" losses and any loss on the sale, right?  Is there a worksheet that supports this number?

Thanks again for your help!

mark

[AmyC]

Yes, line 22 is current loss, prior year suspended loss and loss on the sale (if you sold for less that your adjusted basis = cost -depreciation). Follow these steps to see the schedule, worksheet and report:

1. On the desktop, switch to Forms mode. 
2. Look for sch E in the list of forms on the left. 
3. Line 19 shows your passive losses from prior years.
4. Line 22 is the loss you are allowed to claim. 
5. In windows, right click line 22.
   • Data source will show you where the number comes from
   • About Line 22 - gives you more information. If your losses were limited, Form 8582 would be in your return to show the calculation for limited loss. Since you sold your property, your full loss should be showing on line 22.
6. Look for Sch E Wks to verify carryover numbers - about halfway down
7. Look for Disposition Rpt to see the sale of house, land, any other assets sold. This also shows the reporting form - usually a 4797 for gain on house sale.

I am glad to help!

[mrk2]

Thank you again Amy.  With your detailed explanation I can now see where all the values were gathered and how we end up with the Schedule E and Schedule 1 numbers.  Have great day!  mark