Hello, First time user so excuse any protocol miscues. I cannot seem to find any information of how/where/when or even if it is possible to take passive losses from the rental of an in law apartment that was rented for a 2 years and is no longer rented. All references refer to taking suspended passive losses against taxable gains at the time of disposal to a non-related party. In this case, the apartment was rented out 2 out of 8 years a couple owned a house they had bought with an in-law apartment. Their method of disposal was simply to stop renting it and to use it for storage. They have about 10k in passive losses from previous years. Nothing was ever depreciated and they made no profit on the sale.
If there were passive credits suspended I know that the money from that would be added to the cost basis for the dwelling but these are passive loss deductions. I don't know how- or even if- they can be applied. I keep running into the issue that the disposal was a non-taxable event and the parties to whom it was "disposed" were themselves. There is no other passive income to offset these suspended losses. Am I missing the forest from the trees here?
I mentioned the fact that no depreciation was taken while it was used as an income producing property because this also bothers me. My understanding is that depreciation should be deducted from the basis upon the sale of the home whether or not it was taken (allowed or allowable). That is a smaller, future consideration though, my primary concern is the suspended passive loss carried to this year i.e. if it can be taken and if so, where should it appear is the relevant issue to this year's return. This is the first year I have prepared their taxes. Even more frustrating is that the entire time I have been writing this post (and an addl. 30 minutes before that) I have been on hold with the IRS and finally got an IRS "complex issues" specialist who was trying to seek a definitive answer when my phone ran out of power. Any help greatly appreciated.
If there were passive credits suspended I know that the money from that would be added to the cost basis for the dwelling but these are passive loss deductions. I don't know how- or even if- they can be applied. I keep running into the issue that the disposal was a non-taxable event and the parties to whom it was "disposed" were themselves. There is no other passive income to offset these suspended losses. Am I missing the forest from the trees here?
I mentioned the fact that no depreciation was taken while it was used as an income producing property because this also bothers me. My understanding is that depreciation should be deducted from the basis upon the sale of the home whether or not it was taken (allowed or allowable). That is a smaller, future consideration though, my primary concern is the suspended passive loss carried to this year i.e. if it can be taken and if so, where should it appear is the relevant issue to this year's return. This is the first year I have prepared their taxes. Even more frustrating is that the entire time I have been writing this post (and an addl. 30 minutes before that) I have been on hold with the IRS and finally got an IRS "complex issues" specialist who was trying to seek a definitive answer when my phone ran out of power. Any help greatly appreciated.
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