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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4511
Experience:  35 years tax experience, including four years at a Big 4 firm.
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Dear Tax Professional, I taxpayer has rental loss of $1,114

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Dear Tax Professional,

I taxpayer has rental loss of $1,114 in 2011, that is the only loss for taxpayer and no other sources of income, could this loss be net operating loss that carry over to 2012?

Please advise.

Thank you!

PDtax :

Welcome to the site. I will be helping you today.

good morning,

yes, the rental loss can be considered a net operating loss if that is the only item of income or loss. It may be subjected to some tests first, but can become net operating loss. Here's a simple test.

if the loss is treated as a business loss, that is, if the loss is not limited by passive activity limitations, then it will create a net operating loss. the test is business income against business losses, and once the rental loss clears the passive activity hurdle, it will count.

thanks for asking at just answer.
Customer: replied 4 years ago.
Thank you for your assistance! I believe even though rental business is passive activity, I think as long as the owner materially participates the rental business, the first 25000 rent loss could be offset with ordinary income. If that is the case, lets say in this example, only around $1,000, is it still consider net operating loss that could carry over to next year?

Please advise!

Yes, it is treated as loss available for carryover. don't forget to elect carryover treatment or you will be required to carry the NOL back first.

Thanks from Just Answer.
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