sold california rental home but can't apply passive losses

Forum|Forum|2 years ago
February 4, 2024
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I recently sold my calif rental home that had 40k in passive losses. I have used up all those losses on fed return against arizona rental income. As I understand it Calif allows passive losses to be subtracted from non passive income (gains from sale of home) when it is disposed of. But turbo tax has no way of inputting these losses on California return without changing federal form?

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MonikaK1

Whether you are filing a Nonresident California Form 540NR or a Resident Form 540, the California return uses the Federal Adjusted Gross Income as a starting point and then provides a line for Subtractions and a line for Additions.

Therefore, the Federal AGI that already included the released passive losses would flow through to the California return automatically unless some of the losses were calculated differently due to some differences between Federal and California law, or if you are a nonresident of California.

Please see the California Instructions for Form FTB 3801, Passive Activity Loss Limitations, for information on the areas where California law differs from Federal law.

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