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10276
Level 2

Claim Unallowed Passive Losses that not carry over from previous years

I have a rental property since 2006 and just sold last March 2022 with a capital gains.

I have used TurboTax to report rental incomes and expenses on Schedule E since 2006.

Looking back into my income tax records and found:

2006-2007 there are only Schedule E reported

2008 there are Schedule E and Schedule 8582 with page 3 column (b) unallowed loss of $2,540 reported.

2009-2013 there are only Schedule E reported

2014 there are Schedule E and Schedule 8582 page 3 column (b) unallowed loss of $9,851 reported.

2015-2020 there are only Schedule E reported.

2021 there are Schedule E and Schedule 8582 page 2 column (b) unallowed loss of $4, 221 reported.

Question is when I file my 2022 income tax using TurboTax Premier to report the sale of the rental property in the "Rental Property Section" Section next year, will TurboTax automatically add all previous years "unallowable losses" and "depreciations" claimed to calculate the correct taxable amount of "capital gains" and "recapture depreciations" taxes ... since I don't see any "carry over of unallowed PAL" in all the Schedule 8582. Do I have manually add those numbers found from the old income tax records.

Do you recommend that I should purchase the "TurboTax with Consultant Help" version (more expensive) next year to guide me report correctly through the rental sale portion?

Thanks in advance for your responses to get my mind prepared with my first rental property sale.

2 Best answer

Accepted Solutions
Critter-3
Level 15

Claim Unallowed Passive Losses that not carry over from previous years

I am concerned ... once you have a PAL it remains on the form 8582 until such time as it can be used up or more is accumulated.  So did some of the prior year unallowed losses get used up along the way or did they get lost/forgotten?   Review the 2009 & 2015 returns ... did the loss get used/absorbed ? 

 

Usually the sale of a rental is pretty straight forward if you go slow and read all the screens carefully but I highly recommend you seek local professional assistance if you cannot see where the prior year carryover losses went to. 

View solution in original post

Mike9241
Level 15

Claim Unallowed Passive Losses that not carry over from previous years

The Turbotax expert will know nothing more than what you have provided. in addition, Turbotax only keeps returns for the last 6 years as does the IRS  if you don't have all the prior returns there is no way to check on what happened.  with passive income or losses there should have been an 8582 for every year. 

View solution in original post

4 Replies
Critter-3
Level 15

Claim Unallowed Passive Losses that not carry over from previous years

I am concerned ... once you have a PAL it remains on the form 8582 until such time as it can be used up or more is accumulated.  So did some of the prior year unallowed losses get used up along the way or did they get lost/forgotten?   Review the 2009 & 2015 returns ... did the loss get used/absorbed ? 

 

Usually the sale of a rental is pretty straight forward if you go slow and read all the screens carefully but I highly recommend you seek local professional assistance if you cannot see where the prior year carryover losses went to. 

10276
Level 2

Claim Unallowed Passive Losses that not carry over from previous years

Thanks for your reply

I checked the 2009 income tax and saw the unallowed losses from 2008 was used in 8582.

However when checking the 2015 income tax, there is no 8582 reported nor the unallowed losses from 2014 was used on Schedule E or anywhere else, any time after 2015 ... looks like the 2014 loss was forgotten or unabsorbed in 2015 income tax.

Since it was unused in 2015 or any time later on, can I now use it by manually adding the unallowed loss in 2014 with the unallowed loss in 2021 for calculating the taxable capital gain of the rental sale in 2022?

Instead of using a local professional CPA as suggested, would a "TurboTax online Consultant version" be able to help me claim that prior year while doing the income tax?

Thanks again

Mike9241
Level 15

Claim Unallowed Passive Losses that not carry over from previous years

The Turbotax expert will know nothing more than what you have provided. in addition, Turbotax only keeps returns for the last 6 years as does the IRS  if you don't have all the prior returns there is no way to check on what happened.  with passive income or losses there should have been an 8582 for every year. 

Critter-3
Level 15

Claim Unallowed Passive Losses that not carry over from previous years

To correct this issue the 2015 should be amended to add the missing 8582 and any other tax years needed to carry forward or use the PAL properly.  You cannot just pick it up on the current year return without the history to support it.  Otherwise you can just let it go if it is not much or you don't want to correct the error properly... since it is in the IRS's favor they won't care. 

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