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posted Sep 10, 2024 10:00:06 AM

long-term capital gain offset by ordinary income losses?

This is about a partnership LLC.  If I have long-term capital gains from selling a commercial real estate property, can those long-term gains be offset by ordinary income losses?  For example, if we rent some properties but only brought in $50k in rental income with $75k in rental expenses.  So we have a $25k operational loss that would go against our ordinary income.  But then we sell a property that we held longer than 12 months and realize a $50k long-term capital gain. Can that $25k rental income loss offset some of the $50k long-term capital gain?  I think the rules are different for short-term and long-term capital gain, but I need to clarify.  Thank you.
 
 
 
 
 

 

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Level 15
Sep 10, 2024 10:10:13 AM

The rules aren't different but more information about the LLC's rental operations are needed.

 

Generally, however, losses from rental real estate (i.e., rental expenses exceed rental income) are passive losses which cannot typically be used to offset capital gains.