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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.

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legendpengAuthor

FYI i got an error "Sorry, your account is being reviewed as it may be in violation of our Terms of Use" when sharing the number with you that is why i use the currency format above. please remove $,. etc .

thanks again!

A

AnnetteB6

Question: was the second property listed your primary residence that you converted to be a rental property in 2018?

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legendpengAuthor

yes the 2nd property has been used as primary residence before converted to rental property starting Sep 2018. and first property has been used as rental property since 2017, and it's imported from TT 2017 file.

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AnnetteB6

Thank you for sharing your file. See the answer below and let me know if these steps do not work.

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A

AnnetteB6Answer

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.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

L

legendpengAuthor

hi, i tried your suggestions and it's solved: for 2nd property i checked both "converted from personal use to a rental" and "2018 was the first year i rented this property" options, and entered 0 to the number of days personal use of the property, and deselected QBI on both properties.

thank you very much for the help!