I have loss on real estate. Why does Turbo Tax remove it instead of allowing the loss to carry over to subsequent years ? Can I carry it over ?

[thunderbird]

I am on 2015 Turbo Tax.  I bought and sold a property that shows a loss.  I owned it for just over a year.  Turbo Tax removed the property as it generated a loss.  Under the covers, does TurboTax keep track of that loss for use in offsetting future gains ?   Can that loss be shown instead of just removing it, so it could be used in subsequent years on a rental property ?

[DoninGA]

Did you indicate the property was for personal use or an investment property?  What type of property was sold?
If you selected personal use and had a loss on the sale, the loss is not reported on a tax return nor carried forward.

[Carl]

In a nutshell, losses on the sale of personal property are never deductible. So if the property was not investment property, such as a flip or a rental, the only way you would report it would be if you received a 1099-S. Then the sale would be reportable even though you sold at a loss. But the loss is still not deductible if what you sold was personal use property.

[thunderbird]

I sold a single family investment property purchased with an LLC.  I have done more reading, and think it should go on schedule C.  But if I did not receive a 1099-S, I still don't have to report it ?  If it goes on a schedule C can the loss carry forward ?
When asked on the 1040 if I had interest, I had interest in the business account that was used for this rehab … so it would be considered part of the loss in that property and therefore not reported.

[thunderbird]

I am having a hard time "recommending" you who are helping me... how do I find your comment so I can say "thank you" / thumbs -up/ etc. ?

[Carl]

For investment property, the sale gets reported in the Investments section. Under that, elect to start/update Stocks, Bonds, Mutual Funds, Other and go from there. However, if it was rental property, since you owned it more than a year, and assuming you actually rented it out, you report the sale in the Rental & Royalty Income section. Nothing concerning rental property gets reported on SCH C. Nothing. It's all SCH E.

[thunderbird]

I have gotten different answers on this... I ended up reporting it on Sched C.  But, after a subsequent conversation, it seems better (next time) to use Inventory and Cost of Goods Sold for rehabs.  After all, that is what it is, I think.  Yet, I do not understand the tax treatment of such.  I have not thought of including it as an Investment, as you say, but that now sounds better !  What is the tax treatment of the Inventory vs. Investment treatment?  It seems there are many ways to handle these !  THANK YOU !

[Hal_Al · Accepted solution]

If this is the first and only house that you intend to  "flip" (buy, fix up and sell), it should be treated as investment property and the sale reported on form 8949 and Schedule D. You have a capital loss. Your capital loss deduction is limited to $3000 for the current year. Any excess is carried forward to next year

On the other hand, if you are in the business of flipping houses (or are getting into that), you should report it as self employment/business income on Schedule C (as you apparently did). Your house and the cost to fix it up are "your inventory and/or cost of goods sold. You have a business loss, which can all  be deducted in the year it occurred.

For more background, see https://fitsmallbusiness.com/taxes-on-flipping-houses/

https://ttlc.intuit.com/questions/2795603-where-do-i-file-the-profits-from-a-house-flip-i-have-the-d...