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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15711
Experience:  15years with H & R Block. Divisional leader, Instructor
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Question about Californias 593-E real estate withholding form.

Resolved Question:

Question about California's 593-E real estate withholding form. I'm selling a property I used to live in, but have had as a rental for the last five years. I am taking a loss with the sale and have signed my 593-C form, however I have questions about the 593-E form. The unit has been vacant for five months, which has been a loss in rental income. Does this count as a suspended passive activity loss? Also with regard to selling expenses, do traveling to empty the unit, credits for the buyer and repairs count as part of this cost? Thanks for your help.
Submitted: 5 years ago.
Category: Tax
Expert:  Robin D. replied 5 years ago.

Robin D :

Hello and thank you for using Just Answer.
The rent that you did not receive while the unit was empty is not a loss that can be used. Nondeductible passive activity losses (losses that exceed the income from the passive activity) for the year are "suspended passive activity losses." Suspended losses can be carried forward indefinitely and used in subsequent years against passive activity income. They are allowed in full upon a taxable disposition of the activity, i.e., when the property is sold. The rent not received is not used as a loss on the Schedule E, suspended losses are those that yo have carried forward each year (if any) that you were not allowed to use in a previous year.
The selling expenses would only be those expenses that you had that were directly related to the sale.

Selling expenses include:

  • Commissions,

  • Advertising fees,

  • Legal fees, and

  • Loan charges paid by the seller, such as loan placement fees or “points.”

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