Question

Passive Activity Carryover Losses on Primary Home Sale

Forum|Forum|5 years ago
April 24, 2021
1 reply
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I sold my home in 2020. I was renting part of the house until 2017. I had passive activity losses carried over from before 2017 that I didn't use to deduct in my 2018, 2019 return, since I didn't have any rental income for 2018 and 2019, so I didn't file schedule E on this property. How can I claim this portion of the carryover loss in my 2020 return? Can I simply take the net of recaptured depreciation less the carryover losses (both as of 2017)? Or do I have to input the passive activity carryover losses in a separate spot? Please advise.

ColeenD3

No, you can't net it. You can include the PAL by indicating that you have one and then entering the amount.

To enter Passive Activity Loss Carryovers from a Prior Year for your Rental Property in TurboTax Premier:

Click the Federal Taxes tab
Click Wages & Income
Scroll down to the Rental Properties and Royalties section
Click the blue Show More in this section
Click Start (or Revisit) next to Rental Properties and Royalties (Sch E)
Click Yes
Click Continue
Click the blue Edit button next to the rental you'd like to add info for
Click Continue until you reach the screen entitled Do any of these situations apply to this property?
Scroll to the bottom of this page and check the box next to I have passive activity real estate losses carried over from a prior year.
Click Continue
You'll be able to input the carry over amounts on the next screen

Y

yinglamAuthor

Thank you for the reponse Coleen. I did not have an input for this property under schedule E, since it was not rented in 2020. I tried doing what you suggested and here is what I run into:

1. When I got to the page to input "Passive Losses from Prior Year," it has three boxes -- Schedule E regular tax Carryovers, AMT Carryovers, and QBI carryovers. My carry over losses from 2017 are shown on form 8582 worksheet with what was allowed and accumulative un-allowed up until 2017, not Sch E. Sch E only shows the amount allowed to be deducted for 2017. Please verify that it's the 8582 carryover amount that I need to input here. And do I have to put in AMT and QBI carryovers as well? I really don't know where to find those figures.

2. When I clicked through to the last page where it asked, "Was This Property Rented for All of 2020?" I had to select "I did not rent, nor attempt to rent, this property at all in 2020" because I stopped renting my basement since 2018. It then showed a message saying "since this property was not a rental at all in 2020, you should delete it as a rental. Make sure to keep your complete return, including the Depreciation Report for this property, from 2019 (or the last year this property was used as a rental). And when I clicked "continue," Turbo Tax removed this from Schedule E that I just inputted entirely.

Please advise what I should do in this case. Thank you very much!

ColeenD3

For a personal home that had depreciation, enter it in Sale of Home and enter the depreciation in the screen when you encounter it.

If it was a rental and you did not have any income in 2020, you will have to enter it in Sale of Business Property and manually adjust the basis (add it). Keep your Form 8582 as back-up.

1) Wages and Income

2) Other Business Situations

3) Sale of Business Property

4) Other Property Sales

5) Select Sales of Business or Rental Property that you haven't already reported

6)Choose No to the question, "Do all of the following apply to the property you sold?".

7)Choose Yes to the following screen that asks, "Do any of the following descriptions apply to the items you sold?".

8)Select the type of property from the drop down box.

9)Enter the information for your sale.

[Edited 4/26/2021|8:11PM EST]