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Suspended Rental Loss & Disposition


Randall

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Converted to personal use = withdrawn from service, but that is not a disposition of the activity.  For a qualifying disposition that will trigger current and suspended losses to be currently deductible, three conditions must be met: (1) dispose of the entire activity, (2) in a fully taxable event, and (3) to an unrelated party.

Unless there is other passive income enough to use up these losses, you will still have the suspended losses to track, so I would mark this as out of service but not delete it from the depreciation schedule, and the 8582 will continue to track the losses.

 

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  • 6 months later...

Would like to clarify on this topic:

MY client converted a rental to personal use a couple of years ago.  At the time it had $65,000 plus suspended losses.  He has three other rentals. 

In 2017, he sold one of the other rentals.  ATX is giving him the $65,000 losses on the former rental because he has the gain on the property sold. This uses up all of the suspended losses on all four of the properties and he still has a gain.  Based on my understanding and your info above, this is accurate. 

I just want to confirm this is correct.  I surely don't want to give him a $65,000 loss in error!!

Thank so much!

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