What if you rent it for one month and decide to sell it? Is it still considered passive income/loss?
Why does this matter to you? If you sell the house 1 day or 1 month after you buy it, nothing really changes on the tax front weather it's a rental or not. In general, it only comes into play if you classify the property as a rental for more than 1 year.
If you have unrealized passive losses, can you not use those losses against the gain of the rental house? If you're saying I have to own it as a rent house for more than one year before I'm unable to claim it as a passive loss, that's what I was asking and that's why it matters.
@okst1960 having read through your posts and answers by my colleagues @Mike9241 , @Carl and agreeing with them, I am still unsure as to how you propose to liquidate unrealized losses . You are proposing sell/ liquidate your holdings and thus incur and recognize the losses. Then within the same year you propose to buy a residential ( thus incurring good chunk outlay ), actually rent the asset or declare it available for rent and then after a respectable time lapse sell this asset ( thus incurring sales expenses ( real-estate commission etc. ) and transfer tax etc. and still find sufficient gain to offset your losses. Unless you are living in a very hot market, this is impossible.
Suggest you talk to an accountant on how best to reduce your unrealized loss ( if you really have to divest ).
that is my opinion ( and others may disagree on my conservative look at the situation )
I have several houses, that, over the years, I've been unable to take losses due to income limit. I was just wondering if I could use these unrealized losses to offset a gain on a house. I recently purchased it with the intent to rent it out but I have a buyer that wants to buy it at a substantial gain. I'm not using a real estate agent. It's a cash sale. I didn't know how long I could own the house before selling it as a rent house. I assumed it had to be owned and intended for rent for a certain period of time, otherwise, it would be a flip house, of which, I understand the gain would be taxed at short/long term capital gains tax.
@okst1960 , thank you for the clarification. I think I understand the situation and what you are trying to do.
You are correct in that if the holding period is less than a year , then the gain would be classed as ordinary gain and taxed at your marginal rate. It can still offset ( interact with your) any other short-term gain/loss, Note , however, that the interaction is between realized gain/ loss ( not un-realized ones ).
Hope this make sense to you .
Is there more I can do for you ?
pk