Let me try a different route on my dilema on the unallowed passive loss on residential rental from 2007. Taxpayer has two rental houses and until 2007 all losses had been allowed. The losses were limited in 2007 due to his income. He continues to rent one house. The second house was not rented in 2008 or 2009. Can he still carry forward the unallowed loss on the unrented house for those 2 tax years?
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Yes. It is not "unallowed" but "suspended." It carries over until it can be used. -
Yes, as Burke says, the losses are not unallowed but rather they are suspended. They are suspended until one of two things happens:Originally posted by Burke View Post
1. The rental has income in a year in which there is no AGI limitation. Then a portion of the suspended loss, if not all, can be used to offset the income. This deduction is reflected on Schedule E.
2. The rental property is sold. By definition, in the year of sale, the property is no longer passive and all suspended losses are allowed. Again, this deduction will be reflected on Schedule E.
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