Question

Can I include in passive losses carried forward depreciation not previously claimed?

Forum|Forum|7 years ago
June 5, 2019
2 replies
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This rental property has been a rental since 2004 and some but not all depreciation was claimed. Can I deduct in passive loss carryover only depreciation included on an amended return where this would be limited to the year of being able to amend?

TurboTax Home & Biz Windows

Carl11_2

Employee

What do you mean only "some" depreciation was claimed? Depreciation on the property itself? Or depreciation on property improvements?
Passive losses can only be deducted from passive income up to a limit each year. Once you reach that limit, any remaining losses are carried over. So it's not at all uncommon for passive losses on rental property to increase year to year. Your passive losses will not be realized until the year you sell the property. So what has occurred that would allow you to "deduct" a carryover passive loss?
Did you sell the property in 2016 maybe?

Carl11_2

Employee

Also, depreciation is rarely carried forward. since it's the first thing deducted from the income. If any of the depreciation is carried forward, it's not "included" in passive losses carried forward the way you may think it is. That's because when the property is sold, all prior depreciation is recaptured and taxed in the year of sale. So if you "include" the unallowed depreciation in your carry forward losses, you're double-dipping in the year you sell.