I own 2 real estate rental properties with $132,000 total passive activity carryover losses accumulated for both properties over 5 years.
In 2019 I sold the less expensive of these properties.
I was thinking that Turbo Tax would calculate the suspended passive carry over loss for the one property I sold and it would appear as a deduction for about $32,000 on Schedule E.
What TT did instead was include all of the accumulated carryover loss from this property and the other property that I haven't sold and put a loss of $132,000 on schedule E which is the suspended carryover loss on both properties. I have always in the past reported my rental properties as separate. The capital gains on the sale was $134,000
I have spoken to several CPA's and some say that this is correct. When you sell one property the suspended carryover loss on all properties is released to be used against income up to the amount of capital gains.
Others say that this is incorrect. That only the suspended carryover loss on the property I sold is deductible and the suspended loss from the other property I did not sell will continued to be carried over until I sell it.
Others say that I can choose either option. All have documentation to confirm their opinion.
I was thinking people here might have more experience with selling rental real estate and owning multiple properties so maybe someone will know the tax law regarding this.
I have spent 16 hours on the phone with Turbo Tax "experts" and they know far less about this that I do. I would love to pay a CPA to help me, but I found the people I could reach this time of year dont have much experience with this and didn't know the answer. Any help or guidance is appreciated