Passive Losses on a rental property that was sold.

Forum|Forum|1 year ago
February 14, 2025
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I have over -200K in passive losses on a rental property I owned for 20 years. I sold it in 2022. The negative passive losses still show in my return and hurt my regular taxes.

1. Is there any way to discharge this without any passive gains?

2. Should the passive losses offset the capital gain in the property value from 20 years of ownership?

Thanks!

TurboTax Home & Biz Windows

AmeliesUncle

If you sold it in 2022 in a "fully taxable transaction", those losses should have been released and usable in 2022. If that did not happen, it sounds like you need to amend your 2022 tax return (and very possibly your 2023 tax return if the 2022 losses created a Net Operating Loss on your tax return).

If your 2022 return ends up with a Net Operating Loss (you didn't have enough income for the $200,000 of carryover passive losses to offset), TurboTax does NOT calculate or handle Net Operating Losses automatically, so you may want to go to a good tax professional to deal with this.