Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
rmjones40
New Member

Will rental property losses offset capital gains losses?

Can you use rental property losses to offset realized capital gains from selling stocks and bonds?  For example, the rental property will have a loss of $50,000 compared to capital gains of $100,000.  Would I only have to pay capital gains taxes on $50,000 or would I need to pay on the whole $100,000?

 

Thanks!

1 Best answer

Accepted Solutions
tagteam
Level 15

Will rental property losses offset capital gains losses?


@rmjones40 wrote:

Can you use rental property losses to offset realized capital gains from selling stocks and bonds? 


There are two kinds of passive activities that give rise to passive losses:

  • Trade or business activities in which you don’t materially participate during the year.

  • Rental activities, even if you do materially participate in them, unless you’re a real estate professional.

https://www.irs.gov/publications/p925#en_US_2019_publink1000296799

 

You can only deduct passive losses from passive income (with the exception of the special $25,000 allowance - see link below) and capital gains are not passive income but, rather, are taxed at their own (capital gains) tax rate.

 

$25,000 allowance: https://www.irs.gov/publications/p925#en_US_2019_publink1000104571

View solution in original post

2 Replies
Carl
Level 15

Will rental property losses offset capital gains losses?

No. While both are basically passive activities, they are not "like-kind".  Therefore rental losses can not offset stock/bond investment losses.

tagteam
Level 15

Will rental property losses offset capital gains losses?


@rmjones40 wrote:

Can you use rental property losses to offset realized capital gains from selling stocks and bonds? 


There are two kinds of passive activities that give rise to passive losses:

  • Trade or business activities in which you don’t materially participate during the year.

  • Rental activities, even if you do materially participate in them, unless you’re a real estate professional.

https://www.irs.gov/publications/p925#en_US_2019_publink1000296799

 

You can only deduct passive losses from passive income (with the exception of the special $25,000 allowance - see link below) and capital gains are not passive income but, rather, are taxed at their own (capital gains) tax rate.

 

$25,000 allowance: https://www.irs.gov/publications/p925#en_US_2019_publink1000104571

View solution in original post

Dynamic AdsDynamic Ads
Privacy Settings
v