Question

Why is passive activity loss not limited while income is over $150K ?

Forum|Forum|2 years ago
March 10, 2024
1 reply
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A

Anonymous_

Is this question related to a vacation rental?

See https://www.irs.gov/publications/p527#en_US_2023_publink1000219123

F

fyung3107taxAuthor

Sold my rental property (not vacation home) for loss, TT calculated as ordinary loss offsetting other income. Shouldn't the loss be limited (Form 8582) and reduced to $0 when joint income is over $150K ?

Where did I make an erroneous entry?

A

Anonymous_

No, your loss should not be limited.

When you dispose of a rental property (essentially, business property) all of your suspended passive losses are released and can be used in their entirety to offset all other income.

In fact, the loss can even create a net operating loss in some instances.