Hi,
I have a rental property which was acquired through a 1031 exchange many years ago and which was rented out up until 7-1-13 at which time it was CONVERTED to a vacation home (2nd home) on the same date. It will be used exclusively by my wife and I as a vacation home and not rented out. The property has over 50k in prior year unallowed losses. 2013 Schedule E for the period 1-1-13 through 6-30-13 has a net loss of approx 18k. My questions:
*can I use the prior year unallowed losses of 7k to add to the 2013 18k to bring the total to the max 25k deduction against personal income (there are no limitations or phase-outs for us in 2013)
*what happens to the balance of the unallowed losses? can they be taken in the next few years while the property is in private use status?
*are there any other unforeseen tax consequences to the above described scenario
Thanks you very much for any help or advice.
Hank