Rental Loss Carry forward for a Real Estate Professional

[dermensch]

I am a real estate professional (Realtor) with two rental properties. In 2020 I had $22,000 in rental losses. However, I only needed $10,000 worth of losses to bring my taxable income to $0. Am I able to carry forward the remaining $12,000 in losses to future years? If yes, what form do I use to report this carry forward?

Thank you. 

[Mike9241]

• Passive loss rules do not apply to real estate professionals. However, the rules for who is a real estate professional for tax purposes are rather specific and the IRS enforces these rules rather strictly. If one is classified as a real estate professional, any losses are treated as ordinary losses and may be deducted against other income sources. They are not treated as passive activity loss. 

so what you have to do is use form 1045 schedule A to determine if you had a net operating loss.

https://www.irs.gov/pub/irs-pdf/f1045.pdf 

with a net operating loss, the law requires that a 2020 NOL be carried back to 2015 unless a positive election was included with a timely filed return for 2020 to waive the carryback. 

Turbotax no longer supports 2015. so if that's the year you'll have to do the 1040-X manually or find a tax pro. that maintains that year's tax software 

[Anonymous_]

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@Mike9241 wrote:

• Passive loss rules do not apply to real estate professionals. 

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Passive loss rules do not apply to real estate professionals who materially participate in their rental real estate activities.

See https://www.irs.gov/publications/p527#en_US_2020_publink1000234059

If there is no material participation here, then @dermensch can carry the $12,000 in passive losses forward to future tax years (Form 8582).