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Passive loss carryover from rental sale

Forum|Forum|6 years ago
January 14, 2020
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Sold my rental in 2018. There is a passive loss carryover since I could not deduct all of my losses for several years due to income. When I first started my 2019 return, the carryover loss was included but the property is no longer a rental and has not been for all of 2019 (now personal use). TurboTax instructed me to delete the rental but when I did, any reference to the carryover is gone. How do I get the carryover back?

Best answer by AmeliesUncle

If you SOLD the property in 2018, it seems like you may not have fully told TurboTax that you sold it. If you had done it right, the rental should NOT have carried over, and the Passive Losses would have been fully allowed in 2018. You will need to amend 2018 to correct that.

If you converted it to personal use, those Passive Losses are suspended until you sell the property. You are correct, TurboTax does it wrong by deleting the proper forms (Form 8582). However, if you keep good records, you should be able to claim those suspended Passive Losses when you eventually sell the property.

A

Anonymous_

Employee

Your post is somewhat confusing because, at the outset you stated that you sold your rental in 2018 and then, later, you stated that it had not been a rental for all of 2019 because it was converted to personal use.

If you sold your rental in 2018 and actually had a net loss, that could have generated an NOL which you have to calculate and enter into the program as such; the program does not calculate NOLs and then automatically carry them over to subsequent tax years.

If you converted your rental to personal use, you should have so indicated during the Step-by-Step interview when you were preparing your return (i.e., that you disposed of the property and that "special handling" was required).

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PatYAuthor

thanks for the response. Sorry, I misstated I did NOT sell the property, just converted it to personal use in 2018. Some of the accumulated loss was applied in my 2018 tax return but there was still carryover. As I indicated, when I first started my 2019 return, the carryover was included but TurboTax still thought the property was a rental. When I indicated that it was not rented for the entire 2019 year, it told me to delete it as a rental. When I did, all indications of a carryover disappeared.

In thinking this over, I believe the reason is that the accumulated amount was a result of passive income and the carryover cannot be applied against non-passive income....is that correct? So whenever I have any passive income in the future, I can apply this carryover but not at this time since I have none?

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AmeliesUncleAnswer

If you SOLD the property in 2018, it seems like you may not have fully told TurboTax that you sold it. If you had done it right, the rental should NOT have carried over, and the Passive Losses would have been fully allowed in 2018. You will need to amend 2018 to correct that.

If you converted it to personal use, those Passive Losses are suspended until you sell the property. You are correct, TurboTax does it wrong by deleting the proper forms (Form 8582). However, if you keep good records, you should be able to claim those suspended Passive Losses when you eventually sell the property.

P

PatYAuthor

Thanks. After doing more research, I'm sure you are right, I cannot apply the carryover until I actually sell. For now I just have to keep good records as you said. (Sure wish I could apply it this year...ha)

Thank you all.