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The losses, if limited by the passive activity limitations, will be suspended and realized when you sell the property.
I like to try and convert these types of losses to currently usable, by making sure you might meet the active participation test. If you do, then you will be able to deduct up to $25,000 of these losses.
To summarize, the losses get suspended and recognized upon sale of the property, unless you can deduct them currently through the active participation exception to the passive activity limitations.
Thanks for asking at Just Answer/Pearl.
Thanks. So there is no cut off after x many years or $y dollars in losses that can be realized upon sale?
no limitation. whatever the loss is, you can claim it in the year of sale.