Tax Year Prior to 2020: Where do I enter prior year passive losses on rental property?

[JohnB5677]

For Rental Property Passive losses

1. Rental Properties & Royalties
2. Continue through screens and select the property
3. Select Property Profile
4. Continue to Do any of these Situations apply to you
5. Scroll down and select the proper carryover

Once the Federal data is posted, you will have to go through the State questions to make adjustments.

[softcut]

Where do I find the correct amount from last years return? Which form, which line?

[MarilynG1]

@softcut Your Passive Loss Carryover from last year should show on your Schedule E Worksheet, under Carryforward to 2020 Smart Worksheet and will show on the Schedule E Worksheet on Line 19, Other Expenses. 

Click this link for more info on Prior Year Carryover Losses.

[cindykevinkane]

I can't get to "Do any of these situations apply to this property?" since I didn't rent this year or last.  I want to enter prior year suspended losses. help please.

[MarilynG1]

@cindykevinkane Since you didn't rent in 2019 or 2020, you may want to Amend your 2019 Return to indicate that 'you stopped using the property for business' in the Rental Info that carried over from 2018. 

Since you didn't report any Rental Income/Expenses in 2020, you won't be able to enter your passive loss carryover.  It can only be applied when you have rental activity or when you sell the Rental Property.

If you sold the property in 2020, you can add the Rental Property back into your return and enter the sale info and Passive Loss Carryover amount. 

Click this link for info on How to Report Sale of Rental Property. 

If you didn't sell the property in 2020, keep the amounts of your PAL and Prior Depreciation (form 4562) from the last year you had rental activity handy for when you do sell the property.

Click this link for more info on Selling Rental Real Estate at a Loss. 

[jjcooll]

Hi,

I was able to enter the previous year loss under Carryover's "I have passive activity real estate losses carried over from a prior year". This amount shows up correctly under Federal Form 8582 (Passive Activity Loss Limitation)'s field 1c (Prior year's unallowed losses ...).

However, the field is blank on state (CA)'s 3801 (Passive Activity Loss Limitations)'s field 1c(Prior year's unallowed losses ...). Same field showed up fine last year. Can you let me know how I can modify this field for state?

Thanks!

[Cynthiad66]

According to the following link from the State of California, "the net income (loss) for each passive activity will be carried back to the California form or schedule on which it is usually reported. ... For example, if you have both passive and nonpassive Schedule E activities, you will include all of them on your California Adjustment Worksheet, Schedule E Activities. "   The California Adjustment Worksheet is the only place where this is reported rather than on the Schedule E itself, according to this link. Per @DaveF1006

[Tarrytown]

thank you. This is very helpful

[Tax_User_2020]

Help!

I am using Turbo Tax for the first time.

I entered my previous years prior to Passive Losses $17K

When it calculates Sch E, the full amount of the prior years of carryforward losses is deducted against current year income as Other Expenses – this creates a $14K loss for this year’s reporting.

Now my Form 8582 shows on Worksheet 1:  1(b) Current Year loss of $14K, 1(c) Prior Years Unallowed loss $17K and now 1(e) Loss of $31K.  Is this right?

Feels like it is counting the prior years unallowed losses twice now.

Does this mean my next year’s Sch E now show a $31K Other Expense?

I was thinking it should look like this year's Sch E would calculate a $3K Gain this year.

Then my Form 8582 would look like Worksheet 1:  1(b) Current Year income of $3K, 1(c) Prior Years Unallowed loss $17K and now 1(e) Loss of $14K. 

Thanks.

[Ariadne II]

How can I change a "prior year suspended loss" entry in TurboTax Deluxe?

[PatriciaV]

The instructions below from BarbaraW22 for entering/updating a Passive Loss Carryover (ie: prior year suspended loss) are for TurboTax Deluxe CD/Download. If you are using TurboTax Online, you'll need to upgrade to TurboTax Online Premier version. This is because TurboTax Online Deluxe does not include the forms for Rental Properties.

1. Go to Federal Taxes >> Wages & Income >> Rental Properties and Royalties.
2. Select Update next to Rental Properties and Royalties and then select Yes
3. Answer the questions and select Continue. Then select Edit next to your rental property 
4. Select Update next to Property Profile. Continue through the screens until you get to the section "Do Any of These Situations Apply to This Property?" 
5. Click on the option "I have passive activity real estate losses carried over from a prior year" See screenshot below.

7. Select Continue and the next screen "Passive Losses from Prior Years" allows you to enter your passive activity loss carryover from 2018. See screenshot below.

 

[Kam V]

Hi. 

I have started and LLC to manage my properties in 2021. I have moved my rental income and expenses to the LLC and receive K1 for rents and expenses. I need to enter my Passive activity loss from last year into my personal return.

If I need to do schedule E, how do I respond to my rental status. I would have zero rent to report and only passive loss to enter in schedule E.  How to answer questions such as how many days have I rent the property?

[AmeliesUncle]

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@Kam V wrote:

Hi. 

I have started and LLC to manage my properties in 2021. I have moved my rental income and expenses to the LLC and receive K1 for rents and expenses.

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Is this a multi-member LLC (Partnership)?

[Kam V]

Yes. Two members

[CECPAD]

@BarbaraW22 

Barbara

This post was very helpful, thank you! I have a followup question. . . .

I have followed your steps to add prior year unallowed losses to each of the rental properties I still own.  But there is also a prior year loss for a property that was sold.  (my CPA didn't apply that loss to the gain from the sale, but I want to use it this year to offset the gain from another sale.)

Should I just combine the losses together and add them to one of the remaining properties? or is there some other workaround?