Author Topic: Rental property loss and tax harvesting  (Read 939 times)

vivian

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Rental property loss and tax harvesting
« on: December 26, 2017, 08:14:46 AM »
I'm looking for advice on how to get the most tax advantage from the sale of our rental property. We lived in this house for a few years, but have been renting it for more than 10 years. The price declined sharply in the recession and never recovered. We sold this at a loss and want to sell an stock investment that has a gain, but need advice on how much gain we can realize without paying taxes. Here are some details.

We are estimating the loss from the rental property as follows:

Official loss=Original purchase price + cost of major improvements (which we did while we lived there) - sales price - depreciation we claimed over time - cost of selling the property.

Is there anything we are overlooking? One thing we weren't sure about is what counts as the cost of selling the property. We have the real estate agent's commission, some minor repairs, and the fees that are paid at closing.

Another question we had is whether it matters whether past losses were deducted in our taxes. For the past two years, the rental property had losses but our income was so high the loss couldn't be deducted.

If it matters for answering our question, most of our income is wage (W2) income, although we have a small amount of consulting income, some investment income, and a (very) small amount of royalty income.

Thanks!

clutchy

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Re: Rental property loss and tax harvesting
« Reply #1 on: December 27, 2017, 10:35:53 AM »
so a lot of stuff going on here. 

You have passive activity loss carryforwards it sounds like.  You'll need to take those into account. 
You have depreciation recapture whether you actually depreciated the property or not (allowed or allowable). 
You have basis adjustments to the property and you have sales costs. 
You may also have some FMV sale issues.


If you want it done correctly I'd go see a professional because "get the most tax advantage" is going to be doing the correct way.