Suspended passive lose against same rental property's capital gain upon sale?

Forum|Forum|1 year ago
February 23, 2025
1 reply
0 views

Confused about this subject after searching online. Some say that suspended loss is passive loss and can only offset passive income, and capital gain upon sale of the property doesn't qualify. Other say the opposite that it can be applied. The example of a rental property (my only passive activity):

1. accumulated $50,000 suspended loss carryover through 2024

2. passive net income in 2025 is $5,000; sold the property in 2025 for capital gain of $100,000

can the $50,000 be applied to offset the $5,000 income, the $100,000 sale gain, or both?

Thanks.

Not A Product Question

DianeW777

Yes, it will be used to offset both passive income and any capital gain from the sale of the rental property.

Passive losses can always be used up when there is income from passive activities. And, if you had an overall passive loss in the year of disposition/sale it would be allowed to be used up when the property is disposed of. In your case, there will be an overall net gain but either way you would use it.