Not able to use all my carry over capital loss from stock in 2023 to offset my capital gain on home sale in 2024

Forum|Forum|1 year ago
March 5, 2025
2 replies
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Hi,

We have a capital loss of $270K from carry over from 2023 tax return, in 2024, we sold a rental property we owned for 10 years with a gain of about $200K. We expect the carry over loss can offset all the capital gain. However, Turbo tax gives us a summary that only $125K is used to offset the capital gain. As a result, we still have to pay huge tax on the gain. Is there any thing we missed?

thanks,

GQwe1999

Mike9241

is this your only rental property? if yes, did you indicate complete taxable disposition?

if you have multiple properties do you aggregate them?

do you have nonrecaptured 1231 losses from prior years line 8 of form 4797

the gain should be on form 4797 so review this form to see the gain calculated. line 9a shows the gain transferring to Schedule D

GQwe1999Author

Yes, it's my only rental property

DavidD66

If you had a gain on the sale of a rental property that had been in service for 10 years, a big part of your gain would be depreciation recapture or unrecaptured Section 1250. The netting of your carryforward loss and the depreciation recapture should be netted on Unrecaptured Section 1250 Gain Worksheet, Line 19.

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GQwe1999Author

Yes, but the carry over loss is bigger than the net gain, how come it does not offset all the gain?

mglauner

The general rule is any gain will be recaptured as ordinary gain to the extent of prior depreciation taken. Any gain in excess of depreciation taken will be capital gain. It is only the capital gain component, if any, that will be used to offset your capital loss carryover.

You can use LTCL carryover to the extent any gain exceeds your depreciation recapture.

Here's more info on Using Capital Loss Carryover against Sale of Rental Property Gain.

@GQwe1999