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Posted by Alex M on March 17, 2008, 2:07 pm
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Hi,
I own a rental home property and during 2007 I am having a net loss of 7K
after accounting depreciation and other expenses. I know I cannot take take
the loss against my ordinary income but can this loss be carried forward to
next year and can be offset against the rental income in 2008 for 2008 tax
returns. Also if I sell the property next year can this loss be accounted
against the gains on this property beyond 500K for joint couple. Basically
will I loose this loss or it gets carried forward.
Thanks
V-
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Posted by joetaxpayer on March 17, 2008, 2:28 pm
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Alex M wrote:
> Hi,
> I own a rental home property and during 2007 I am having a net loss of 7K
> after accounting depreciation and other expenses. I know I cannot take take
> the loss against my ordinary income but can this loss be carried forward to
> next year and can be offset against the rental income in 2008 for 2008 tax
> returns. Also if I sell the property next year can this loss be accounted
> against the gains on this property beyond 500K for joint couple. Basically
> will I loose this loss or it gets carried forward.
> Thanks
> V-
Last I looked, you may take up to $25,000 against ordinary income,
phased out as your (MFJ) income ranges from $100K to $150K. So I trust
you are up there. If not you need to review the rules regarding this matter.
If you may not take that loss for 2007, it carries forward until you can
use it (due to decreasing costs/ rising rents) or until you sell the
property. These losses can not be lost to you.
BTW - it's a rental, forget the $500K exclusion, that's for the home you
live in. (I won't go into the intricacies of converting from one use to
another, too convoluted, and not your question.)
JOE
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by D. Stussy on March 17, 2008, 5:35 pm
Please log in for more thread options > Hi,
> I own a rental home property and during 2007 I am having a net loss of 7K
> after accounting depreciation and other expenses. I know I cannot take
take
> the loss against my ordinary income but can this loss be carried forward
to
> next year and can be offset against the rental income in 2008 for 2008 tax
> returns. Also if I sell the property next year can this loss be accounted
> against the gains on this property beyond 500K for joint couple. Basically
> will I loose this loss or it gets carried forward.
> Thanks
Form 8582.
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by removeps-groups@yahoo.com on March 17, 2008, 5:35 pm
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> I own a rental home property and during 2007 I am having a net loss of 7K
> after accounting depreciation and other expenses. I know I cannot take take
> the loss against my ordinary income but can this loss be carried forward to
> next year and can be offset against the rental income in 2008 for 2008 tax
> returns. Also if I sell the property next year can this loss be accounted
> against the gains on this property beyond 500K for joint couple. Basically
> will I loose this loss or it gets carried forward.
If you are a real estate professional (meaning you work around 15
hours a week or more on your property and a few other conditions), you
can deduct your loss in full.
http://www.irs.gov/businesses/small/article/0,,id=146825,00.html
If you're an active participant (meaning you may delegate
responsibilities to others but sitll make the management decisions,
approve tenants, etc) then you can deduct up to 25k, but it is phased
out at 150k. Same for single and married, rather strange.
If you're a passive investor, you can deduct any loss.
Any loss you can't deduct gets carried over until you can use it or
until you sell the property.
You only get the 500k exclusion if you lived in the house for 2 of the
last 5 years. So if you lived there for 2 years, then rented it for 3
years, you're set. Assuming your gains on the property are 600k, and
your disallowed loss over the 3 years is 50k, then your capital gain
on the house is 600k-500k=100k, and gain from Schedule E on line 17 is
negative 50k. So yes, it does offset, but the capital gain is taxed
at 15% (or 0% if your AGI is low enough) and the loss lowers your
ordinary income so if you were in the 33% tax bracket you would be
saving 0.33*50k, and maybe your tax bracket would drop even.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Mark Bole on March 17, 2008, 6:02 pm
Please log in for more thread options removeps-groups@yahoo.com wrote:
>
>> I own a rental home property and during 2007 I am having a net loss of 7K
>> after accounting depreciation and other expenses. [...]
>
> If you are a real estate professional (meaning you work around 15
> hours a week or more on your property and a few other conditions), you
> can deduct your loss in full.
And you work no *more* than 15 hours week at any *other* job that is not
real-estate related, and you materially participated. Not all states
conform to this rule.
Working 15+ hours/week "on your property" would bother the tenants,
wouldn't it?
[...]
> You only get the 500k exclusion if you lived in the house for 2 of the
> last 5 years. So if you lived there for 2 years, then rented it for 3
> years, you're set. Assuming your gains on the property are 600k, and
> your disallowed loss over the 3 years is 50k, then your capital gain
> on the house is 600k-500k=100k, and gain from Schedule E on line 17 is
> negative 50k. [...]
Don't forgot the up-to-25% gains tax on the unrecaptured sec. 1250 gain
from depreciation allowed or allowable.
-Mark Bole
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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