Passive loss offset capital gain

cabosn — Sat, 01 Jun 2019 16:50:59 GMT

I converted a rental property to a personal residence and am now selling it using my $500k exemption. I have realized a $60k capital gain. I had $60k of carry forward loss on that property that disappeared when I stopped renting it. TT is using a $60k capital loss carryover from schedule D to offset my gain. How do I get my passive loss back so I don't use my capital loss carryover?

1) When you use a home as you Principal Residence AFTER...

TaxGuyBill — Sat, 01 Jun 2019 16:51:00 GMT

1) When you use a home as you Principal Residence AFTER it was a rental property, you usually can not exclude all of the gain, it will be prorated, so a certain percentage of the sale will be taxable.

2) In addition to #1, you can not exclude the gain from the depreciation that you took.

3) The gain from #1 and #2 will be offset by your capital loss carryovers.

4) Your Passive Loss Carryover is completely separate from all of the above. TurboTax is not set up to report that, but the 'work around' is to say you had a rental property this year and sold it. One of the questions will ask if the rental has a Passive Loss Carryover. Don't enter any expenses or depreciation for this 'rental', as this is ONLY to report the Passive Losses to be used.

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Passive loss offset capital gain

1) When you use a home as you Principal Residence AFTER...