Selling property that used to be rental

kmartin12 — Tue, 24 Feb 2026 06:50:45 GMT

A property was rented for several years, but then changed to personal usage once a relative moved in and was no longer paying rent. It has not been reported on the returns as a rental for 5 years. Now they want to sell the property. There will be a gain on the property and I do realize that I have to account for the depreciation taken while it was rented. Also, it is not now and never has been their primary home.

The client has long term capital loss carryovers on the returns. I can use those to offset the gain on the property being sold, correct?

Re: Selling property that used to be rental

Anonymous_ — Sat, 29 Jul 2023 14:23:38 GMT

You can use the capital loss carryovers to offset the capital gain from the sale.

Note, however, that unrecaptured Section 1250 gain (from previous depreciation deductions) is taxed at your marginal tax rate (up to 25%) which could be higher than your top capital gains tax rate (depending upon your total gain, et al).

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Selling property that used to be rental

Re: Selling property that used to be rental