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Suspend Losses on Single Property despite having multiple other's where allowed

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Level 1

Client has multiple properties that are rented, but some are undergoing rehab and should have the losses suspended. How do I do this? I see it flowing through to Sch. E and coming up on 8582

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Level 11
Level 11

On the asset worksheet scroll down to dispositions, and put in date you want to suspend, but no sale price

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Level 15

You *suspend* the supposed *losses* by capitalizing the expenses that shouldn't be taken in the current year due to the property not being in service.    Those expenses should not be on Sch E in the first place (IF your fact pattern is correct regarding the rehab costs....).

Former Chump... umm.... AllStar.
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Level 11

What I am reading here is that there is a property with a 2018 loss, and no activity in 2019.  And there are properties with profits in 2019, or maybe the AGI is low enough to allow losses.  What happens to the 2018 carryover loss?  A taxpayer can just pick and choose what year to take it? I haven't come across this situation before, so there may be something I'm missing.  

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Level 11
Level 11

I think we need more detail from @info2 . I thought he just wanted to suspend schedule E. for a time, although normally you continue to take expenses if remodeling. Didn't question his reason for suspending just gave him the mechanics.   

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Level 15

Obviously there are different ways to interpret the OP.

Only @info2 can help us determine how to handle the situation by providing MORE info....

Former Chump... umm.... AllStar.
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Level 1

Thank you team for the support.

 

Facts are, building is under rehab, so I want to suspend losses since it's currently unavailable for rent. I understand that the rehab expenses could be put in the asset worksheet when available for rent and make the property available for business in that year, but the other expenses are what I would like to suspend. Instead of just tabulating it on excel and then dumping it on sch. e. the year of availability, i was hoping to suspend that particular building's E losses, and carry it forward till when available.

 

Best

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Level 12

@info2 wrote:

Thank you team for the support.

 

Facts are, building is under rehab, so I want to suspend losses since it's currently unavailable for rent. 

 


 

Rehabbing rental property usually does not take it out of service (see below for part of Publication 527 about depreciation).  It is still a rental property, so depreciation and expenses are still taken.  You don't have the option to not use them.

If you truly think it is taken out of service ... it is not a rental.  There are no losses because it is not a rental property.  You can't take (or suspend) expenses for a non-rental property.  It might be possible to capitalize those expenses into the Basis of the building, but you can't just suspend the expenses then take the full amount whenever is convenient for you.

 

Idle Property

Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it isn’t available for rent.

 
Retired From Service

You stop depreciating property when you retire it from service, even if you haven’t fully recovered its cost or other basis. You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events.

  • You sell or exchange the property.

  • You convert the property to personal use.

  • You abandon the property.

  • The property is destroyed.

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Level 11
Level 11

from pub 527, "If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. However, you can’t deduct any loss of rental income for the period the property is vacant.". Here is link to pub 527:

https://www.irs.gov/publications/p527#en_US_2017_publink1000219000

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