Passive Losses

Pinevalleyite — Fri, 19 Mar 2021 02:58:24 GMT

Every year for the 8 years we’ve own our rental property, we’ve had a passive loss. We sold it in 2020 and in trying to figure out if we can now recapture all those losses against the sale price to reduce our gain, looks like TurboTax only pulls in last year’s loss. Do I need to pull out all my schedule E’s from 2013 on or can I only deduct that last year loss?

Re: Passive Losses

DavidD66 — Fri, 19 Mar 2021 03:34:29 GMT

All of your passive losses that you were unable to deduct should have carried forward, and offset the gain on the sale. You shouldn't have to do anything manually. If you used TurboTax to file your tax return last year, any Passive Loss Carryovers would appear on Schedule E Wks - Carryforward to 2020 Smart Worksheet (final page - note this is a TurboTax supplemental schedule and not an IRS form). If you didn't use TurboTax last year, your Passive Loss Carryover appears on Form 8582 Page 2 Worksheet 5.

To enter your passive loss carryover in TurboTax:

In TurboTax, open your return
In the Search box on the top right of your screen, enter passive loss carryover, schedule e and click on Find at the right
In the search result box, click on Jump to passive loss carryover, schedule e
The program will take you to the Income from Rentals section. Answer Yes
Follow the interview until to get to the screen Do any of these situations apply to this property? (see attached screenshot)
Put a check mark next to I have passive real estate loss carried over from a prior year and click Continue

If you aren't already, I recommend you use TurboTax Desktop to resolve this issue. It has a "Forms" feature that allows you to view Forms and Schedules, and make/edit entries directly on them. If you're using TurboTax Online and want to switch to Desktop, see the following Help Article:

How do I switch from TurboTax Online to the TurboTax software?

topic Passive Losses in Investors & landlords

Passive Losses

Re: Passive Losses