How to apply Rental Property Passive Loss Carryover to another rental after converting the rental with the loss to personal use

Forum|Forum|2 years ago
March 24, 2024
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Hi,

I have two rental properties. I converted one to personal use last year. In the previous year, it had a carryover loss. When I converted it to personal use, turbo tax deleted it as a rental. I would like to use the carryover loss to offset passive gains from the other rental this year. How can I do this? In the year that the loss occurred (last year), I was able to deduct it from the other rental property income, bringing its income down to zero, and the remainer of the loss becoming the carryover associated with the property that is now personal use. Since turbo tax deleted that property as a rental this year, the carryover loss does not appear on Form8582, and Turbo Tax does not seem to be offsetting the carryover passive loss from the remaining rental property's passive gain.

TurboTax Home & Biz Windows

PatriciaV

If you have the Schedule E Worksheets for your rental properties from last year, you can add the carryover losses to the remaining rental property on your current year return. The Carryovers to 2023 appear on the worksheets under "Carryforward to 2023 Smart Worksheet." Or you can refer to Form 8582 page 2 Part VII.

Edit the property profile and look for Special Situations (or "Do any of these situations apply to this property?") Check the box under Carryovers for "I have passive activity real estate losses carried over from a prior year." The next screens will provide boxes for you to enter the carryovers under the appropriate category.

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A

Anonymous

Thanks. But since I did not rent the property last year, it gets removed from Turbo Tax, along with the passive loss that was associated with it. Turbo Tax removes the property profile, so I can't get to the "Special Situations" menu. I was able to use some of the loss from this property against a different rental property the previous tax season, and I would like to use the remaining passive loss from the no-longer rented property against that same other rental that is still active. I can't figure out how to do this.

D

DianeW777

The following instruction should help you with the location to enter your carryover loss. You must go into the rental property income section first, then follow the steps to enter your carryover loss. Use this information on the property you still show as active now.

Any passive activity loss (PAL) carryforwards allowed would be listed on your Form 8582, Worksheet 5 or 6, in your 2022 tax return as 'unallowed loss'. If you have a PAL and it does not seem to be populated in your 2023 tax return you can take the following steps to enter it.
- Use the magnifying glass to Search (upper right) > Type rentals > Jump to Rentals > Select Edit beside your Rental Activity > Under Less Common Situations > Review Carryovers, limitations, at risk info, etc. > Continue to enter your passive loss carryover. See the image below for assistance.

Suspended passive activity losses (PALs) can be use in only two circumstances:

Against passive-activity income (the property you still have)
When you dispose of the passive activity in a fully taxable transaction to an unrelated party