Passive loss carryforward

[dimetricus]

Hello -- 

I have a question on passive loss carryforward that i have from renting out my apartment. After it was rented for a couple of years and I accumulated a loss, I moved back in it and I have no loss to show in 2022.

Do I need to include the carryforward loss from the prior years on the 2022 tax return? It seems like Turbotax only allows to do include the prior loss only if the apartment were rented out in 2022 otherwise it won't allow to mention it. Does it mean I should be able to use the loss on 2021 tax return in the future even if 2022 return doesn't mention it at all?

Also wonder if the carryforward loss is specific to this apartment or if I have a gain elsewhere on a different property I'd be able to use this loss?

Thanks in advance for your help

D

[DianeW777]

Yes, in the future you will be able to use the loss.  Since the property is no longer rented and has been converted to personal use it is allowed to be used only against other passive income.  You should track your loss and keep the 8582 with your current tax return each year until you do one of three things:

1. Sell the property in a fully taxable exchange to an unrelated party, OR
2. Convert it back to a rental property
3. Use a portion each year against other passive income

If you have no other passive income, the suspended losses remain suspended. Carry them forward until you sell the home in a fully taxable transaction.

You can add a Form 8582 to your tax return if you are using TurboTax Desktop or your choose to convert it from TurboTax Online.

• How do I switch from TurboTax Online to TurboTax CD/Download?
  • Switch to Forms and click 'Open Form' then type 8582 (to carry the loss forward each year until used)

[dimetricus]

Great thanks, so it looks like what you are confirming is that the carry forward should be explicitly entered on 8252 every year. I am using CD version on my Mac and it won’t allow me to edit 8252 directly and in the interview the passive loss appears only if and when the property’s rented. How do I navigate this?

Also - can this loss be used against gain I have on another property? Based on the answer you gave it seems like a no but just wanted to be sure.

 Thanks a lot for your help 

D

[ThomasM125]

Form 8252 would be tied to the rental schedule E and it should be included in your return every year you have passive losses or passive loss carryforwards from other years. It would be best to leave the schedule E in your program and just go to each asset and indicate that you took them out of service. When you update the rental property there is an option to say you converted it to personal use, if you choose that option it may preserve the Form 8252 and stop the depreciation entries on schedule E, then you wouldn't have to visit each asset and indicate that they were taken out of service. When you sell the rental property you will need the asset information to report properly the gain of sale of it.  You can use the passive losses against passive income from other rental properties and other passive activities.