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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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what is a passive loss carryover on a schedule e rental ex

Resolved Question:

what is a passive loss carryover on a schedule e rental expense?
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.
Hello marin,

Gains and losses from rental properties are considered to be passive gains and passive losses, because it is income or losses which is derived on a regular basis with little effort involved to maintain the income.

Unless you are considered to be a real estate professional, you are limited on the amount of passive losses you may claim in any one year. If your passive losses exceed the amount you are allowed to claim in one year, then you are allowed to carryover those losses and use them in future years when you have a positive income flow, or they can be deducted when you eventually sell the property. That is what a passive loss carryover for rental expense is on Schedule E.

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Thank you marin

Customer: replied 8 years ago.
These losses are then not actual losses from year to year but carry overs from previous years loss? Such as a fire or casualty loss?
Expert:  Merlo replied 8 years ago.
Yes, passive loss carryovers are losses you had in prior years which you were not able to claim due to limitations put on the amount of losses you can claim in one year. Those excess losses are then carried forward to the next tax year, and they continue to carry forward until you have been able to use the losses or until the property is disposed of.

If this was helpful please press the Accept button.

Thank you marin

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