Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 05-29-2014, 03:16 PM
Junior Member
 
Join Date: Feb 2014
Posts: 2
Form 6198 and Rental Loss

My wife and I are Canadian residents and we own a rental property in Florida. In 2013 we had a rental loss of $9,300 ($9,000 revenue less $18,300 expenses). This is fully a passive investment. We do not have any other income or expenses on our 1040NR form. I anticipate that every year going forward we will have a loss in the $7,000 to $9,000 range. Do we need to fill our form 6198? Will we ever be able to use our cumulative losses for any tax purposes?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 05-30-2014, 03:23 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by Swervin View Post
My wife and I are Canadian residents and we own a rental property in Florida. In 2013 we had a rental loss of $9,300 ($9,000 revenue less $18,300 expenses). This is fully a passive investment. We do not have any other income or expenses on our 1040NR form. I anticipate that every year going forward we will have a loss in the $7,000 to $9,000 range. Do we need to fill our form 6198? Will we ever be able to use our cumulative losses for any tax purposes?
My wife and I are Canadian residents and we own a rental property in Florida. In 2013 we had a rental loss of $9,300 ($9,000 revenue less $18,300 expenses). This is fully a passive investment. We do not have any other income or expenses on our 1040NR form. I anticipate that every year going forward we will have a loss in the $7,000 to $9,000 range. Do we need to fill our form 6198?=============>>>>>>>> As you tried to rent it and simply take losses, you could complete Sch E for 2013amd deduct expenses.Form 6198 is used to figure the profit (loss) from an at-risk activity for the current year. Form 6198needs to be filed if you had any amounts that were not at risk invested in an at-risk activity. At-risk limitations would be needed, unless for some reason you are not at-risk for the real estate debt. If you are responsible for paying the real estate debt, then you should be at-risk. As the rental is your only passive type activity ( as you have no other interest in other types of passive activities such as partnerships, corp, or other real estate ventures), the IRS is trying to determine if the losses on Sch E of 1040 were, in effect, funded 100% with your own money. If you paid for all the expenses out of your pocket, then all of that "investment" is at risk. Hpwever,you do not need Form 6198 as that is only to determine how much loss is allowed when some of the investment is not at risk. If this is your only passive activity, and you have an overall loss, then you may deduct a loss up to $25k aslongas you actively tried to rent it, and you will not have to file form 8582 if all of the reqTax laws that limit the amount of tax losses an investor (particularly a limited partner) can claim.
Note; Tax laws limit the amount of tax losses an investor (particularly a limited partner) can claim. At-risk rule means that losses on real estate investments will be deductible only to the extent of the amount of money the equity investor stands to lose.for inatance,If you have $10K at risk in a real estate investment that generates $3.33K per year in tax losses, the losses may be used for only three years;$10k/$3.33K Thereafter, the losses may be used only if you contribute more money or property (net of withdrawals) or becomes liable to repay borrowed money. Amounts at risk include: cash contributed to the activity ;borrowed money for which the investor is personally liable ; property pledged as security for the real estate activity, provided the property is not used in the activity An exception is made for qualified third-party non-recourse financing.

Will we ever be able to use our cumulative losses for any tax purposes?=================>>>>>>>you need to file Form 8582, , if you have incurred losses on the property. This is to substantiate and claim any passive loss carryovers either when you have income from the rental property or when you sell the property.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 05-30-2014, 03:58 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by Swervin View Post
My wife and I are Canadian residents and we own a rental property in Florida. In 2013 we had a rental loss of $9,300 ($9,000 revenue less $18,300 expenses). This is fully a passive investment. We do not have any other income or expenses on our 1040NR form. I anticipate that every year going forward we will have a loss in the $7,000 to $9,000 range. Do we need to fill our form 6198? Will we ever be able to use our cumulative losses for any tax purposes?
My wife and I are Canadian residents and we own a rental property in Florida. In 2013 we had a rental loss of $9,300 ($9,000 revenue less $18,300 expenses). This is fully a passive investment. We do not have any other income or expenses on our 1040NR form. I anticipate that every year going forward we will have a loss in the $7,000 to $9,000 range. Do we need to fill our form 6198?=============>>>>>>>>>> As you tried to rent it and simply take losses, you could complete Sch E for 2013amd deduct expenses.Form 6198 is used to figure the profit (loss) from an at-risk activity for the current year. Form 6198needs to be filed if you had any amounts that were not at risk invested in an at-risk activity. At-risk limitations would be needed, unless for some reason you are not at-risk for the real estate debt. If you are responsible for paying the real estate debt, then you should be at-risk. As the rental is your only passive type activity ( as you have no other interest in other types of passive activities such as partnerships, corp, or other real estate ventures), the IRS is trying to determine if the losses on Sch E of 1040 were, in effect, funded 100% with your own money. If you paid for all the expenses out of your pocket, then all of that "investment" is at risk. Hpwever,you do not need Form 6198 as that is only to determine how much loss is allowed when some of the investment is not at risk. If this is your only passive activity, and you have an overall loss, then you may deduct a loss up to $25k aslongas you actively tried to rent it, and you will not have to file form 8582 if all of the reqTax laws that limit the amount of tax losses an investor (particularly a limited partner) can claim.
Note; Tax laws limit the amount of tax losses an investor (particularly a limited partner) can claim. At-risk rule means that losses on real estate investments will be deductible only to the extent of the amount of money the equity investor stands to lose.for inatance,If you have $10K at risk in a real estate investment that generates $3.33K per year in tax losses, the losses may be used for only three years;$10k/$3.33K Thereafter, the losses may be used only if you contribute more money or property (net of withdrawals) or becomes liable to repay borrowed money. Amounts at risk include: cash contributed to the activity ;borrowed money for which the investor is personally liable ; property pledged as security for the real estate activity, provided the property is not used in the activity An exception is made for qualified third-party non-recourse financing.

Will we ever be able to use our cumulative losses for any tax purposes?=================>>>>>>>>>>you need to file Form 8582, , if you have incurred losses on the property. This is to substantiate and claim any passive loss carryovers either when you have income from the rental property or when you sell the property.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Help with Form 4797 and sold rental property for a loss millironzb Rental Real-Estate 8 02-04-2014 06:00 PM
Can sale of rental fall between gain and loss wilbur2009 Rental Real-Estate 5 03-29-2013 11:02 PM
Total loss-selling rental property angrywoman Rental Real-Estate 4 12-29-2012 01:16 AM
Loss on Sale of Rental - Are there limits to loss deductions rolzroyce Rental Real-Estate 1 05-25-2012 07:56 PM
Overseas Rental Loss Thyrza Rental Real-Estate 0 08-30-2010 04:18 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning