On Mar 17, 9:32 pm, Norm <norm.pinna...[at]gmail.com> wrote:

- quote -

Yeah, I totally forgot about depreciation.

Schedule E will have a loss of 7k, allowed because you are disposing
of the property, so it is transferred to Line 17 if 1040. Line 13
will be the capital gain which includes profit on the house minus the
allowable exclusion, plus the depreciation of 6k. So these are
balancing each other out: -7k (say you are in 25% tax bracket that
reduces your tax by 1.75k), 25% capital gains on 6k (increasing your
tax by 1.5k).

What if you sell the house at a loss? There is no loss for personal
residence, so I guess you still have a capital gain of 6k*0.25. But
if you didn't live in the house for 2 of the last 5 years, then you
could take a capital loss on the house. So the question is: if you
did live in the house 2 of the last 5 years, do you have to treat it
as a personal residence (because treating it as business property is
favorable if you are selling at a loss)?

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On Mar 17, 3:02*pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -


Scenario: There was not active participation and the renter is not a
real estate professional so the $7K loss is not allowed. Of the $7K
loss, $6K was depreciation.
The following year the home is sold. Technically the $6K would have
to be recaptured as income. How can you use the disallowed loss to
offset the income? Seems tough to have to include depreciation as
income when it never was used (disallowed) to reduce the income in the
first place??


========================================= MODERATOR'S COMMENT:
Please trim away all extra text not needed in your reply.

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removeps-groups[at]yahoo.com wrote:
- quote -

And you work no *more* than 15 hours week at any *other* job that is not
real-estate related, and you materially participated. Not all states
conform to this rule.

Working 15+ hours/week "on your property" would bother the tenants,
wouldn't it?

[...]
- quote -

Don't forgot the up-to-25% gains tax on the unrecaptured sec. 1250 gain
from depreciation allowed or allowable.

-Mark Bole

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On Mar 17, 11:07*am, "Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

If you are a real estate professional (meaning you work around 15
hours a week or more on your property and a few other conditions), you
can deduct your loss in full.

http://www.irs.gov/businesses/small/...146825,00.html

If you're an active participant (meaning you may delegate
responsibilities to others but sitll make the management decisions,
approve tenants, etc) then you can deduct up to 25k, but it is phased
out at 150k. Same for single and married, rather strange.

If you're a passive investor, you can deduct any loss.

Any loss you can't deduct gets carried over until you can use it or
until you sell the property.

You only get the 500k exclusion if you lived in the house for 2 of the
last 5 years. So if you lived there for 2 years, then rented it for 3
years, you're set. Assuming your gains on the property are 600k, and
your disallowed loss over the 3 years is 50k, then your capital gain
on the house is 600k-500k=100k, and gain from Schedule E on line 17 is
negative 50k. So yes, it does offset, but the capital gain is taxed
at 15% (or 0% if your AGI is low enough) and the loss lowers your
ordinary income so if you were in the 33% tax bracket you would be
saving 0.33*50k, and maybe your tax bracket would drop even.

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"Alex M" <lallavj[at]yahoomail.com> wrote in message
news:1205776728.939432[at]sj-nntpcache-2.cisco.com...
- quote -

Form 8582.

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Alex M wrote:

- quote -

Last I looked, you may take up to $25,000 against ordinary income,
phased out as your (MFJ) income ranges from $100K to $150K. So I trust
you are up there. If not you need to review the rules regarding this matter.
If you may not take that loss for 2007, it carries forward until you can
use it (due to decreasing costs/ rising rents) or until you sell the
property. These losses can not be lost to you.
BTW - it's a rental, forget the $500K exclusion, that's for the home you
live in. (I won't go into the intricacies of converting from one use to
another, too convoluted, and not your question.)

JOE

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Hi,
I own a rental home property and during 2007 I am having a net loss of 7K
after accounting depreciation and other expenses. I know I cannot take take
the loss against my ordinary income but can this loss be carried forward to
next year and can be offset against the rental income in 2008 for 2008 tax
returns. Also if I sell the property next year can this loss be accounted
against the gains on this property beyond 500K for joint couple. Basically
will I loose this loss or it gets carried forward.
Thanks
V-

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >