Question

Offset capital gains from selling calls/puts with rental loss

Forum|Forum|2 years ago
March 21, 2024
1 reply
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Hello,

My vague understanding of tax code is that one can offset gains from passive income with losses from other passive income. Here's my example:

last year i made about $10k from selling options (covered calls, secured puts), these should be considered passive income. And i also have a ~2k loss from a rental property. I entered these in TT however, i do not believe TT is offsetting the option selling gains w/ the rental losses.

First i'd like to know if my understanding is correct in that i'm able to offset these gains and secondly, where can i verify if TT is doing it correctly for me?

M

mglauner

No, you can't offset capital gains from investment sales with rental income losses. Though they are both passive income, as you mention, they are considered different types of income.

Although the rental loss reported on Schedule E does not directly affect Capital Gains reported on Schedule D, unless you can't claim your rental loss due to income limitations, in the bottom line, you are using both items to determine taxable income.

Here's more info on How Capital Gains are Taxed.