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- Previous rental property with passive loss carryforward how to handle
Previous rental property with passive loss carryforward how to handle
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rx7TII
Level 1
02-26-2021
10:26 AM
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The taxpayer has a property listed as rented for a number of years though 2019 that has a large passive loss carryover. The property was not held for rental at all in 2020 and was personally used (family living there no rent received). The property most likely will be rented in 2021 though at FMV.
I am hoping somehow they can claim the max allowed for the passive carryover loss in 2021 assuming income is low enough with active participation - not sure if they can though.
1.) Can the passive loss carryover from 2019 prior be claimed in 2021 as a $25,000 max loss if rented again even though it was personally used in 2020?
2.) How to report - Does the previous passive carryover loss need reported on form 8582 for 2020 even though not rented? If so I am unsure how to do this without leaving the rental in the software at 0 days rented / 0 days personal no expenses/depreciation. Or is form 8582 unnecessary for 2020 because it was already reported in 2019?
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1 Comment 1
TaxGuyBill
Level 15
02-26-2021
11:26 AM
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@rx7TII wrote:
1.) Can the passive loss carryover from 2019 prior be claimed in 2021 as a $25,000 max loss if rented again even though it was personally used in 2020?
2.) How to report - Does the previous passive carryover loss need reported on form 8582 for 2020 even though not rented? If so I am unsure how to do this without leaving the rental in the software at 0 days rented / 0 days personal no expenses/depreciation. Or is form 8582 unnecessary for 2020 because it was already reported in 2019?
Yes, the Passive Loss Carryover is still valid when it is a rental in 2021.
Yes, Form 8582 is supposed to be still filed with 2020. However, ProSeries erroneously does not do it. I think most people probably just don't file 8582, but as you pointed out, a work-around would be to enter it as a rental property with zero income/expenses. Both methods are technically wrong.
I suppose a possibly better way would be to attach the 8582 as a PDF.
