Help with Suspended Passive Losses on a Rental that had been converted to primary

Forum|Forum|1 year ago
November 12, 2024
2 replies
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Hello,

If Rental A had been converted into Primary residence last year. How can I carry forward the Suspended losses from Rental A to the following year so the losses can be used to offset income from Rental B? If I remove Rental A from Schedule E, the suspended losses for Rental A is gone from Form 8582 in TT.

Please advise, Thank you!

Best answer by AmeliesUncle

@chanhiu wrote:

So using RentalA's carryover suspended losses (after converted personal) to offset Rental B's income is allowed, correct?

If so, I could overwrite Form 8582 to include RentalA's losses and paper file for 2024. T

I think so.

I would not recommend it. You can't override that form in TurboTax and if you start manually doing things you are more likely to make a mistake somewhere. As I said before, I would choose the lesser of two evils and file a blank rental with zero days.

Anonymous_

Employee

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chanhiuAuthor

Thanks tagteam. So I still dont fully understand. Can I keep Rental A on Sch E with $0 income/expense so the losses will flow thru and can offset with income from another rental? If so, does TT allow you to input 0 days for rental & personal days? Also, will this cause any red flag for the IRS?

I just didn't want to override anything in TT (like on form 8582) since it will error out when efiling. Thanks again!

Anonymous_

Employee

No text available

AmeliesUncle

The program might let you enter 0 rental and 0 personal, but you would then be reporting that you DO have a rental property. You DON'T have a rental property, so there should NOT be a Schedule E showing a rental.

The program is faulty and won't let you continue to report the passive loss on 8582 without the Schedule E.

I suspect that most people just don't file the required 8582 during those years, but that is wrong and could potentially lead to problems in the future.

You could file the 0/0 Schedule E in order to keep filing the 8582; even though that is wrong, that might be the lesser of two wrongs. Because you have a second rental property, this is your better option (the best option is to use different software that actually does it correctly).

chanhiuAuthor

Thanks AmeliesUncle,

So using RentalA's carryover suspended losses (after converted personal) to offset Rental B's income is allowed, correct?

Put the TT technical issue aside, If Rental A is removed from Sch E, could A's carryover losses remain on Form 8582? If so, I could overwrite Form 8582 to include RentalA's losses and paper file for 2024. The losses should be used up in 2024. Would it work?

Thanks again!

AmeliesUncleAnswer

@chanhiu wrote:

So using RentalA's carryover suspended losses (after converted personal) to offset Rental B's income is allowed, correct?

If so, I could overwrite Form 8582 to include RentalA's losses and paper file for 2024. T

I think so.