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Old 03-22-2016, 10:02 PM
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Which form to offset capital gain with rental loss?

I am a non resident alien. In 2012, I purchased a condo for 60.6K in Florida and had a property management company rent it out for me. I have filed my returns on form 1040nr with Schedule E since then:
2012 : rental loss (3.2K) including depreciation (1,6K)
2013 : rental loss (4.6K) including depreciation (2.2K)
2014 : rental loss (4.5K) including depreciation (2.2K)

In February 2015, I sold my condo for 72.8K. Prior to the sale, I incurred a rental loss of (0.9K) in 2015.
I understand that I can offset the capital gain (72.8K - 60.6K + 6K = 18.2K) with the passive activity loss.
However, I do not know which form to use. I assume that there should be some computational form, the results of which would populate form 1040nr.
I do not have any other type of income or business in the US.
Any tip would be welcome.



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Old 03-24-2016, 04:37 AM
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In February 2015, I sold my condo for 72.8K. Prior to the sale, I incurred a rental loss of (0.9K) in 2015.
I understand that I can offset the capital gain (72.8K - 60.6K + 6K = 18.2K) with the passive activity loss.==========>>>>>>> Unfortunately, the IRS definition of passive income does not include capital gains.Passive losses are only deductible up to the amount of passive incomeYou may not offset passive losses against nonpassive income.
So, if you have a passive loss from a passive activity and nonpassive income from a nonpassive activity, such as a sole proprietorship that you own and run, you would not be allowed to deduct a loss from the passive activity from a net profit of the sole proprietorship. Your gain is $18.2K; $72.8K-$54.6K($60.6K-$6K) so $6K of $18.2K?d be sec 1250 depreciation recapture taxed at 25% the rest of 12.2K ?d be long term capital gain taxed at 15% aslongas your marginal tax rate is higher than 15%.







However, I do not know which form to use=========>>you need to file for, 4797;as



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Old 03-24-2016, 01:53 PM
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[quote=Wnhough;31128]In February 2015, I sold my condo for 72.8K. Prior to the sale, I incurred a rental loss of (0.9K) in 2015.
I understand that I can offset the capital gain (72.8K - 60.6K + 6K = 18.2K) with the passive activity loss.==========>>>>>>> Unfortunately, the IRS definition of passive income does not include capital gains.Passive losses are only deductible up to the amount of passive income You may not offset passive losses against nonpassive income.

Reply: https://www.irs.gov/Businesses/Small-Businesses-&-Self-"Employed/Passive-Activity-Loss-ATG-Chapter-5-Dispositions

Passive losses are generally deductible only to the extent of passive income. However, current and suspended losses are fully deductible if there is a ?qualifying disposition.? Under IRC ? 469(g), a ?qualifying disposition? requires three criteria:
- Disposition of an entire interest (or substantially all[1])
- In a fully taxable event (where all gain/loss is realized and recognized).
- To an unrelated party.
If these three tests are met, losses are fully deductible against non-passive income (unless the taxpayer has basis limitations). Thus, in the year of disposition, losses allocable to the passive activity may offset portfolio and other investment income or may become part of a net operating loss."

Since I meet those 3 criteria, shouldn't I be able to deduct my passive activity losses against any gain I make from the sale of my condo?



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Old 03-24-2016, 01:56 PM
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https://www.irs.gov/Businesses/Small...5-Dispositions

Passive losses are generally deductible only to the extent of passive income. However, current and suspended losses are fully deductible if there is a ?qualifying disposition.? Under IRC ? 469(g), a ?qualifying disposition? requires three criteria:
- Disposition of an entire interest (or substantially all[1])
- In a fully taxable event (where all gain/loss is realized and recognized).
- To an unrelated party.
If these three tests are met, losses are fully deductible against non-passive income (unless the taxpayer has basis limitations). Thus, in the year of disposition, losses allocable to the passive activity may offset portfolio and other investment income or may become part of a net operating loss.

Since I meet those 3 criteria, shouldn't I be able to deduct my passive activity losses against any gain I make from the sale of my condo?



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Old 03-25-2016, 03:06 PM
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Quote:
Originally Posted by beachcomber381 View Post
https://www.irs.gov/Businesses/Small...5-Dispositions

Passive losses are generally deductible only to the extent of passive income. However, current and suspended losses are fully deductible if there is a ?qualifying disposition.? Under IRC ? 469(g), a ?qualifying disposition? requires three criteria:
- Disposition of an entire interest (or substantially all[1])
- In a fully taxable event (where all gain/loss is realized and recognized).
- To an unrelated party.
If these three tests are met, losses are fully deductible against non-passive income (unless the taxpayer has basis limitations). Thus, in the year of disposition, losses allocable to the passive activity may offset portfolio and other investment income or may become part of a net operating loss.

Since I meet those 3 criteria, shouldn't I be able to deduct my passive activity losses against any gain I make from the sale of my condo?
Passive losses are generally deductible only to the extent of passive income. However, current and suspended losses are fully deductible if there is a ?qualifying disposition.? Under IRC ? 469(g), a ?qualifying disposition? requires three criteria:
- Disposition of an entire interest (or substantially all[1])
- In a fully taxable event (where all gain/loss is realized and recognized).
- To an unrelated party.
If these three tests are met, losses are fully deductible against non-passive income (unless the taxpayer has basis limitations). Thus, in the year of disposition, losses allocable to the passive activity may offset portfolio and other investment income or may become part of a net operating loss. =>agreed;aslongas you have sufficient taxable income/gain 9AFTER YOU recapture the sec 1250 depreciation taken in previous years)to claim the suspended losses. In general, you may fully deduct any passive loss carry-overs in the year you sell or dispose of your investment. If you have passive income, you must complete Form 8582, Passive Activity Loss Limitations, to summarize income and losses from passive activities and compute the deductible losses.

Since I meet those 3 criteria, shouldn't I be able to deduct my passive activity losses against any gain I make from the sale of my condo?==>>correct; but as said after you recapture the sec 1250 unrecaptured depreciation and then you still have taxable income/gain then you can.



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