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Rental now main home

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    Rental now main home

    My client had a rental property for 10 years. In 2019 taxpayer lost her job and moved into the rental property which they did not rent in 2019. In 2018 when the house was a rental they ended up with a carry over loss of $25000. Since the house is currently not being rented, but maybe rented in the future, can I take the $25000 loss in 2019.

    #2
    I think IRC 469(f) says the loss is carried forward but it is still treated as a passive loss.

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      #3
      Originally posted by rwm221 View Post
      can I take the $25000 loss in 2019.
      No.

      However, in the year of a fully taxable disposition of the property, you can deduct the loss (assuming you have been carrying it forward correctly each year). "Fully taxable disposition" can include some Sec 121 exclusion if it applies in the year of disposition.

      Not all software handles this very easily. My software allows me to mark a rental activity as "inactive" so that the data supporting the adjusted basis and passive loss remains in the return, even without any rental income or expense.

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