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Is there a restriction on "Complete taxable disposition" of rental property sale (loss), making over $186,163.00?

papershredder
Level 1

Client's had a rental property for TY 2015 with a loss, they were unable to claim the loss for the reason of their combine income of $147,332.00. For TY 2016 also had a loss and where unable to claim because of their combine income of $204,905.00. In TY 2017 they had a combined income of $186,163.00 and rented part of the year their rental property then sold it. On the asset entry form I enter the date of the disposition the date when it was acquired sales price and expenses of sale. Unable to claim the losses because of their income I notice on the schedule E "Complete disposition" when I check on that option: they were able to claim -$93,874 of the loss of the sale (on line 14 of 1040) and -$6,739 when they rented the property (on line 17 of 1040). Which then bringing their total income at $85,550.00 elevating their refund to over $27,000. I am a bit intimidated for this option being that I never had this happen yet I have read the instructions and publication and not found comfort of making this option. Need someone looking out the box for me and their opinions.    

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abctax55
Level 15

Any suspended rental losses ARE released when there is a taxable, complete disposition of the property.  This happens without regard to the income level. 

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches

View solution in original post

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6 Replies 6
abctax55
Level 15

Any suspended rental losses ARE released when there is a taxable, complete disposition of the property.  This happens without regard to the income level. 

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches

View solution in original post

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papershredder
Level 1
THANK YOU SO MUCH FOR YOUR COMMENT
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Just-Lisa-Now-
Level 15
Level 15

You're doing it right!  That's exactly what's suppose to happen.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Lynn
Level 2
Agree with Lisa.  Keep that box on Sch E checked.
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papershredder
Level 1
THANK YOU SO MUCH LISA
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Just-Lisa-Now-
Level 15
Level 15
I freaked out the first time I had one that created a big loss and giant refund too!  LOL

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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