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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2365
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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I make about $190,000 file as head of household and have 2

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I make about $190,000 file as head of household and have 2 dependants of which one is a handicapped child so my deductions for medical, etc are very high. The last 2 years I got hit with the ATM, as my income only was this high for 2 years. I have a piece of rental property that I paid 135K for in 2005 and have an offer to sell it at 50K. I am wondering if I will be permitted to take this loss in 2009, as my income is a little less this year. I ran it through Turbo Tax and it looks like I can deduct a loss of about 75K after deducting depreciation. If this is correc I could avoid the ATM and pay for my child to get the home modifications we need for her wheelchair bound situtation Can I deduct this loss against my income?
Hello and thank you for using Just Answer. Owning rental property is a passive activity and you will not be able to deduct the total $75,000 from your ordinary income. The loss is a capital loss and is limited to the capital loss rules. The limit is $3,000 for individuals each year for ordinary income. To read more about dispositions of rental property go to www.irs.gov/publications/p925/ar02.html#en_US_publink1000104640
Customer: replied 7 years ago.
I have had rental properties before and when they were sold had to take the gain or loss in one year - has something changed
All gains from the sale of rental properties are tax at the long-term capital rate. All losses from the sale of rental properties are netted against capital gains. Up to $3,000 of excess capital losses are deductible against ordinary income each year. Unused net capital losses are carried forward indefinitely and may offset capital gains, plus up to $3,000 of ordinary income during each subsequent year.

When you sold your rental property before did you have a gain or a loss from the sale?
Hi 2004 Shawn

I must respectfully XXXXX XXXXX my colleague. You may take a loss from the sale of rental property in full in the year of the sale. You will need to take into account any depreciation that you took over the years, but no, nothing has changed recently in these laws.

You still report the sale on Form 4797 and any loss realized on the sale is netted with your other income (such as wages, bank interest, etc) on page 1 of your Federal 1040.

I hope this helps.
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2365
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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