Can we apply passive loss carryover when we converted our rental to personal use when it was rented 45 days. .

Forum|Forum|2 years ago
March 3, 2024
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We have $30k in passive loss carryover. I need to know if the $25k special rule applies when the rental was only partial year and we converted to our residence.

TurboTax Online

Anonymous_

Employee

Passive losses can be used to offset passive income.

Suspended passive losses are released upon a sale to an unrelated third party in a fully taxable transaction.

The $25,000 special allowance for active participation is calculated on an annual basis; there is no carryover of the unused part of the allowance.

See https://www.irs.gov/publications/p527#en_US_2023_publink1000219124

haynan53-gmail-cAuthor

I read the references. It appears I can take the loss carryover. Agree? It’s not prohibited in the “caution” area.

Anonymous_

Employee

You can use up to $25,000 in any one single tax year if you're filing a joint return and meet the income limitations.

If your losses exceed the $25,000 special allowance, then you can, of course, carryover any loss in excess of the $25,000.

Does that answer your question?

Mike9241

you can take the $25K provided there was active participation and your modified adjusted gross income was $150K or less for 2023. see form 8582 part II. any loss not allowed is carried over, However, since you converted the property to your personal residence any non-deductible loss won't be allowed until you sell the residence in a fully taxable transaction.