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Loss of sales of rental property

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    #1

    Loss of sales of rental property

    My client wants to sell a house of their primary residence but it will cause a loss.
    if the house is converted from primary resident to rental for a while, I think the loss can be netted with other capital gain.
    is my understanding correct ?
    if so is there a time length for which the house is on rental ?

    Thank you for your advice.
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    #2
    The loophole you are looking for does not exist. When a personal use residence is converted to a rental and then later sold, the basis used for calculating a loss is the FMV at the time of conversion, so whatever personal loss they have already incurred won't be allowed as part of the rental loss on sale, only a loss incurred after the date put into service as a rental. And as you seem to be aware, a personal loss on sale of residence is not deductible. This is explained in the IRS pubs somewhere but I don't have time to look it up now; it's also been discussed in this forum and is probably even explained somewhere in TheTaxBook desk reference (our forum sponsor).
    "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

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      #3
      ok thank you so much ! I will look for the IRS pub and the forum.

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        #4
        Originally posted by Will610 View Post
        My client wants to sell a house of their primary residence but it will cause a loss.
        if the house is converted from primary resident to rental for a while, I think the loss can be netted with other capital gain.
        is my understanding correct ?
        if so is there a time length for which the house is on rental ?

        Thank you for your advice.
        Think it might help if you can share when you say “.....is my understanding correct ?

        What is that based on?
        Always cite your source for support to defend your opinion

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          #5
          Robert is correct all that fun stopped in 2012. It was more popular to change your vacation/secomd home home to your home so after two years you could sell it with no gain also.

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            #6
            Originally posted by JON View Post
            Robert is correct all that fun stopped in 2012. It was more popular to change your vacation/secomd home home to your home so after two years you could sell it with no gain also.
            You are referring to something completely different, which has no relevance whatsoever to what I wrote or to the original question.

            "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

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