Question

Use of losses in years after property was sold

Forum|Forum|6 years ago
December 19, 2019
3 replies
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I sold a rental property in 2018 (a qualified taxable transaction). Over the 12 years I owned the property it had operating losses (expenses exceeding income) and those losses were suspended as I did not have other passive income to use them against. When I sold the property TurboTax brought all the losses forward and used the total as an adjustment to my 2018 income. However the total of the losses were more than my income, therefore I had losses "leftover". Should I expect those "leftover" losses to carry forward to be used in 2019?

A

Anonymous_

Employee

@phil106 wrote:

....However the total of the losses were more than my income, therefore I had losses "leftover". Should I expect those "leftover" losses to carry forward to be used in 2019?

In the year you dispose of the entire interest in the rental property in a fully taxable transaction to an unrelated third party, all of the suspended passive losses are released and can be used to offset other classes of income.

Note that you should review your 2018 return as you most likely have an NOL (net operating loss - not calculated by TurboTax) which may be carried forward to the 2019 tax year.

See https://turbotax.intuit.com/tax-tips/rental-property/selling-rental-real-estate-at-a-loss/L2RKgClm4

A

Anonymous

you probably have an NOL which can be used against 2019 income. IRS pub 536 contains the worksheet to compute it. however it is somewhat complicated so post back if you have questions

https://www.irs.gov/pub/irs-pdf/p536.pdf

TT does not compute NOL's

P

phil106Author

Apologies as I am not sure as the proper way to continue the conversation (first time posting) so I ended up replying directly to you and adding a reply as part of the thread.

Thanks for the responses and the NOL seems exactly what I need to do. I had just one rental property and therefore only one year of NOL when I sold the property in 2018. I am sorting through the worksheet and will see if I need to post back with any questions. However, one immediate question is, once I calculate the NOL for 2019, where will I insert it in my 2019 tax forms and, since TT does not calculate it, what do I include as supporting documentation.

A

Anonymous_

Employee

@phil106 Although TurboTax does not calculate an NOL, the software makes entering an NOL from a previous year a simple matter (see the screenshots below - the first is from the Online version of Premier while the second is from desktop Home & Business).

nolprem.pngnolhb.png

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phil106Author

Thanks for the responses and the NOL seems exactly what I need to do. I had just one rental property and therefore only one year of NOL when I sold the property in 2018. I am sorting through the worksheet and will see if I need to post back with any questions. However, one immediate question is, once I calculate the NOL for 2019, where will I insert it in my 2019 tax forms and, since TT does not calculate it, what do I include as supporting documentation.