Passive losses and capital gains on sale of rental property

davidbnky — Tue, 10 Mar 2026 07:04:12 GMT

I sold a piece of rental property this year. I bought it in 2016 for 270K and sold it for $380K. Every year that I owned it, I showed a passive loss on the property. That passive loss was non-deductible. So, basically, I had to declare depreciation but not get to deduct it. I know that I have to deduct depreciation from my basis when calculating capital gains. So, how does the passive loss work? Do I get to add it back into my basis when calculating the capital gains on the rental property? Thanks.

David

Re: Passive losses and capital gains on sale of rental property

rferreira 1 — Wed, 16 Nov 2022 17:11:27 GMT

Passive activity losses that were subject to passive activity loss limitations are carried over to the date of sale. They are then added to your basis to help reduce your capital gain on the sale.

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Passive losses and capital gains on sale of rental property

Re: Passive losses and capital gains on sale of rental property