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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1304
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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I own a Condotel in florida. It is worth now about 50 percent

Resolved Question:

I own a Condotel in florida. It is worth now about 50 percent less than I bought it for. I have been renting it out for 5 years in order to earn some money to help pay the mortgage. Always in the red at the end of the year.

If I sell it, Im hopeful the losses I have incurred and will incur will help me with my taxes. Will it?
Submitted: 5 years ago.
Category: Tax
Expert:  Mark D replied 5 years ago.

Mark D :

Hello

Mark D :

When you dispose of a passive activity, any previous year unallowed losses will be freed up in the year of disposition

Customer:

hi

Customer:

yes..but do the losses only go against the investment income or can they go agains income from my regular job

Mark D :

Also, for the sale, you will first have to recapture depreciation previously allowed, but the resulting loss is ordinary under Section 1231.

Mark D :

so it can offset your job income

Customer:

really?

Customer:

so if I lost $100K , I can deduct $100 K from my ordinary income?

Mark D :

correct

Customer:

and can any remaining loss over what I can take in one year be carried to the nextg?

Mark D :

If a net operating loss (NOL) is generated, it can be carried back first, or you can elect to waive the carryback and carry it forward

Customer:

ive been accruing losses each year to put against the sale of the property. However, there will be a loss based on my original purchase price and then the annual losses --ie taxes, maint, mortgage etc.

Customer:

all are deductable against ordinary income?

Customer:

when i sell

Mark D :

yes, when disposed

Customer:

interesting. that makes me feel a bit better

Mark D :

Glad I could help

Customer:

so in your opinion, i should sell it while my job income is healthy?

Mark D :

I would not opine on that without knowing intimate details

Customer:

big loss on the condo...healthy tax payer on income here

Mark D :

In short, I would recommend you do it in a year you have income to offset, or perhaps help offset a ROTH conversion

Customer:

ok good advice...i guess it can offset cap gains, and dividends as well as ordinary income?

Mark D :

correct

Customer:

thank you .,.i will accept your answers

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