There are some other exceptions to the passive loss rules that this video didn't mention. The biggest one is that you can also use the tax loss to offset non-passive income if the rental is a short-term rental with an average that of 7 days or less, and also you meet the qualifications for material participation. That is a major tax advantage of short-term rentals that the vast majority of tax professionals are still unaware of unfortunately.
Unfortunately, I don't have the expertise or qualifications to advise you in this area. There are dozens of other RU-vid channels devoted to this very subject.
What happens if you sell rental property where you end up with a loss for the year (and there are carried through losses from prior years)? Can it be used to offset other income or factored into calculating the capital gains on the sale?
Yes. Whenever you dispose of a passive activity with accumulated losses, you get to take all the losses and use them to offset other income. It reduces your taxable income, but it is not directly offset against the capital gains.
No, it's considered to be passive with active participation. Losses can only be used to offset other passive income, but you would be use up to $25,000 in losses to offset other income, as shown in the video.
Hi, as a U.S. citizen, if I bought a new construction condo in 2019 in Ukraine, and builder/project went BK, and recently, the city of Kyiv repossesed the land they were building on, claiming it was gotten fraudently in 2006 involving a bribe. Dead project Not sure how to write off this loss. Can't find any info. Do you know, or if not, where I can find such info? Thanks
This is known as "involuntary conversion." This is the same as essentially selling the property for $0. How it's handled depends on the use of the property. If the property was rented out, you might be able to write the entire loss against other income. If the property was held for investment, it would be an ordinary capital loss and your write-off would be limited to $3,000. Complicating this matter is the property being in a foreign country, which may be subject to differing IRS rules. My best advice is to engage an Enrolled Agent, CPA, or attorney who can make sure this is done properly.
@@TheTaxGeek Thx for the detailed response. I will do so I assume it would be long term cap loss, and I can write it off against long term cap crypto gains?
