Home, then rental, then loss

[Possi]

My client lived in his home for 8 years.
Relocated and rented his house out for 13 months.
Sold the house at a substantial loss.

Where does it state that he can't take the loss? I can't find it.

[Roland Slugg]

Where does it state that he can't take the loss?

It doesn't.

But what "it" ... i.e. the Internal Revenue Code and/or Regs ... does say, is that when personal use property is converted to business or rental use, for purposes of calculating losses or depreciation (but not for purposes of calculating gain) the basis for the property on the date of its conversion is the lower of its adjusted basis or FMV on that date. This basis must thereafter be adjusted for depreciation, etc., after conversion. (Reg §1.167(g)-1)

IMO there is only one way to adequately establish the FMV of real estate, and that is with a legitimate appraisal done by a licensed appraiser. If one was not obtained at the time the house was converted to rental use, it may be possible for the owner to obtain a retroactive (retrospective) appraisal, and I would urge him to contact an appraiser and arrange to get one.

[Y2KEA]

Basis

When was property converted to rental?
Basis for gain or loss is TP adjusted basis or FMV on date placed in service, whichever is lowest.

[Possi]

thanks

And there "it" is.
Thanks!

[Possi]

Thanks!

Thanks for the reminder. That was my hiccup, alright. I knew that, it just wasn't coming to me. This last week is KILLIN' me.
Thanks for being here!!