Repossession of Rental Homes

[lisakev]

Can a NOL carryover be used to offset the cancellation of debt and gain from the repossession of a rental home?

[Koss]

Nol

I can't think of any reason why it couldn't be used to offset such a gain...

Just to clarify this--

Is your client a party that lost ownership of a rental property in a foreclosure?

Or is your client a party that repossessed a property after the buyer defaulted?

Your post makes it sound like your client lost an investment property in a foreclosure proceeding.

But I've seen cases where the the owner of a rental property sells it to someone on a land contract, or a seller-financed mortgage, and then takes the property back when they can't make the payments. This can sometimes result in a gain for the party who actually repossesses the property.

I've heard of cases where an owner has "sold" the same property three or four times.

[LMAO

[lisakev]

Yes, the party is the one who has lost ownership of multiple rental homes this year in foreclosures. He has a large loss carryover. He will have forgiven debt for each property due to property value decline below his mortgage balances. He may also have gains on the distributions after depreciation is applied to basis. Any help on this is greatly appreciated.

I can't think of any reason why it couldn't be used to offset such a gain...

Just to clarify this--

Is your client a party that lost ownership of a rental property in a foreclosure?

Or is your client a party that repossessed a property after the buyer defaulted?

Your post makes it sound like your client lost an investment property in a foreclosure proceeding.

But I've seen cases where the the owner of a rental property sells it to someone on a land contract, or a seller-financed mortgage, and then takes the property back when they can't make the payments. This can sometimes result in a gain for the party who actually repossesses the property.

I've heard of cases where an owner has "sold" the same property three or four times.

[LMAO

[Roland Slugg]

An NOL is simply a deduction from gross income (i.e. towards AGI) in a carryover year. It matters not what kind of income is reported on the return in a carryover year.