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How to apply one rental property's loss to another rental property's income? tried combined business but doesn't work.

Forum|Forum|6 years ago
June 4, 2019
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hi,

i am a landlord and own 2 rental properties, one result in 8k loss and the other 6k income. i want to combine the 2 rental activities to offset the income and get better tax benefit (I am not real estate pro, and my income is more than 150k, so i can't deduct the loss if i treat it as separate activity.). i already selected on page "should this business be treated as part of a combined business" on each of my rental properties, but it doesn't work for me. I also verified on scheduled E there are 2 activities on line 1 a, but there is only one activity on form 8582 p2 which is the one that has loss, not sure if this is related and how to solve this in TT.

if i understand correctly, i should be able to apply the passive activity loss of my first property to the income of my second property? if yes could you please let me know how could i do that in TurboTax?

TurboTax Premier Online

Best answer by AnnetteB6

When you are entering information about a property that has been converted from personal use to a rental property, be sure to check the box in the General Property Information section to indicate that it was Converted from personal use to a rental in 2018.

By doing so, you will be asked the proper questions necessary to set up the depreciation for the property. You will also be able to indicate the number of days that the property is used as a rental without considering the part of the year that the property was used as your residence. When asked about personal use of the property, you will only consider whether there was any personal use after the date it was converted to be a rental property. This will allow your expenses to allocate properly as well.

Making those changes should correct the situation that you were seeing that was not combining the total from both properties on your Schedule E.

Additionally, you would not need to indicate that the first property is part of a combined business. Typically, rental activities are considered passive activities and are not Qualified Business Income.

A

AnnetteB6

Go through the General Property information for each property and be sure that the Active Participation question is answered the same way for each one.

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L

legendpengAuthor

yes I already selected Active Participation on each property at the beginning. the only thing that i recalled is when i added the second properties i deselected combined business because at that time i don't know what does it mean. only after i noticed that my loss is not applied then I selected combined business to try and it's still not working as expected, that is why asking here.

A

AnnetteB6

Can you verify what line 26 of your Schedule E is showing? If the properties are being combined, it should show about $2k loss based on your question.

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L

legendpengAuthor

schedule E p1 line 26 is showing about 6k income. line 25 is 0. line 22 A is 0 as well, that is why i traced to form 8582 p2 and noticed there is only one property listed there.

A

AnnetteB6

Would you be willing to send a diagnostic copy of your tax file so that we can try to determine the source of the issue? If so, please follow these instructions:
- sign in to your online account and go to your tax return
- select Tax Tools in the menu to the left
- select Tools
- select Share My File with Agent
- a pop-up message will appear and you will need to select OK to send the sanitized diagnostic copy to us
- you will also need to provide the token number that is generated by typing it in a comment below

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L

legendpengAuthor

sure! to be clear i am using Premier Mac version of TT. after login to my online account i don't see a "Tax tools" in the menu to the left, all i have seen is "Tax Home", is it because i am not using online version of TT?

L

legendpengAuthor

i just tried creating a initial version of online return and was able to see the tools and share with agent menu. looks like this is an option only applicable for online version. for Mac version is there acsimilar feature/tool?

A

AnnetteB6

Based on the information I could see with your question, it appeared that you were using an online version so the instructions were for the online version. Let me check for Mac instructions.

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A

AnnetteB6

On the top of the screen while in your tax return, choose Help, then select Send Tax File to Agent.

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L

legendpengAuthor

this is awesome! and thanks a lot for the help. it's $5,087.17 please take a look