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Old 02-26-2011, 09:53 AM
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Question 1245 or 1250 property to report on Form 4797???

I owned and personally lived in a condo for two years and then moved out and converted it into a rental property. I had the condo for a rental property for about three years and sold it this year. I am not sure if it would be considered a 1245 or a 1250 property on Form 4797???

Also I have a net loss on the condo but my tax software is calculating this net loss in Part III of form 4797....the gains section of the form....is this correct??? It then transfers this loss ($8957) information to parts I and II of 4797 and later to the 1040 line 14. Can I deduct all of that this year or is there a limit to what I can deduct and the rest gets rolled over....if so what is that limit?

Any help would be greatly appreciated!!! I have been reading different IRS publications for about two hours now and still cannot find the answers to my questions.



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Old 02-26-2011, 10:13 PM
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“I am not sure if it would be considered a 1245 or a 1250 property on Form 4797???”---> It is sec 1250 property.
“Also I have a net loss on the condo but my tax software is calculating this net loss in Part III of form 4797....the gains section of the form....is this correct???”-Yes; you put in negative number($8,957) on From 4797 line 30 and 32 if the number on line 31 is $0.
“ It then transfers this loss ($8957) information to parts I and II of 4797 and later to the 1040 line 14.”--->Correct;
“ Can I deduct all of that this year or is there a limit to what I can deduct and the rest gets rolled over....if so what is that limit?”---> A loss from the sale of a rental property is tax deductible as an ordinary loss. Ordinary losses are deductible in full against your ordinary income (like your wages and interest you earn, for example). So, a loss on the sale is treated as an ordinary loss. This is actually not a bad thing.



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Old 02-27-2011, 12:13 PM
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Thank you very much!



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