Capital losses offset capital gains

Tax2019Pay · ‎February 13, 2023

Dear Experts:

I have a few general questions about capital gain offsetting capital loss as follows and thanks for your advice in advance.

1. If one has both capital gains and capital losses in the same year, is there a limit how much losses are allowed to offset the gain? For example, if one had $150,000 gain selling a rental property, and she also had $80,000 losses from selling stocks in 2022, is she allowed to offset the whole $80000 losses from the gain thus reducing the gain to $70,000 (i.e., $150,000 - $80,000)? I know if the total gain + loss = - 4,000, you can only deduct - 3,000 this year and carry - 1,000 to next year's tax return. However, I wonder if there is a cap how much capital losses are allowed to offset gain in any given year? Is there - $100,000 cap or -$250,000 cap?

2. If one has net capital loss in any given year (mainly due to sale of stock at loss), can she use the suspended K-1 passive losses that are carried over from previous years the gain from selling a rental property (as an individual investor but not as a real estate agent)?

Thanks

Mike9241 · ‎February 13, 2023

there is no limit. all the losses can be used to offset the gains. if the losses exceed gains by more than $3000 that's all that can be deducted against other income any excess is carried forward to offset gains in future years,

when a passive activity is disposed of the losses are no longer passive. upon complete disposition of the activity any suspended losses are allowed

Tax2019Pay · ‎February 14, 2023

Thanks. Can I ask you to explain what you said, "when a passive activity is disposed of the losses are no longer passive. upon complete disposition of the activity any suspended losses are allowed"? Do you mean that I can use the suspended, accumulated and carried forward passive losses in K-1's to offset the gains from sale of rental property? Thanks. BTW, the K-1's are for the passive investments in apartment communities and there are capital losses in the beggining of the investments due to renovation cost.